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Scots or English law – what’s best for my Terms of Business?

Your Koffeeklatch Terms of Business work well in Scotland because the Scottish and English legal systems – in contract law – are closely aligned. (In other areas of law, there are significant differences. On buying and selling houses, for example, lots of people say Scots law is better, and they’re probably right!).

 

But the “Law and jurisdiction” clause at the end of your Terms of Business (which says the contract is governed by English law and the English courts) is probably not ideal for you if you are in Scotland, especially if your client is in Scotland too. On a practical basis you don’t want to be bothering with coming south of the border to enforce your contract, and if you do get to argue your case in a Scottish court, you don’t want a supplementary argument about which law is applying.

 

So, in the Booking Form, in the box which says “Special terms for this Booking” put: “This agreement will be governed by Scots law and subject to the exclusive jurisdiction of the Scottish courts.” That will mean you can use ordinary contract enforcement procedures in Scotland.

 

If your client is in England, it’s not so obvious. You might decide that it would be better to leave the terms as they are, and have your contract under English law with any claim in the English courts.  It may well be more economical to bring a case in the English courts against an English client.  It should be easier to enforce a judgement against an errant client too, as judgement will have been given in the same jurisdiction as them and their assets. But the simple answer: for a business based in Scotland serving a client based in Scotland, it’s definitely better to use the alternative wording suggested above and have Scots law applying to your case in a Scottish court.

 

When you have a client in a different country, it’s always going to be difficult and expensive to enforce terms of your contract if there is a breach. It’s neither simple nor cheap to go to court even if the client is in the same town as you, but being cross-border adds a new level of cost and complexity. So think of how you can avoid things going wrong in the first place.  For example, make sure you get paid in advance … or at least only let the client run up a little (affordable) bit of credit. But if the problem is serious and valuable, you will have the right to bring a claim whatever your choice of law and court in the contract – although an important first step will be to make a careful assessment of the value of your time and the likely legal costs that will be consumed in the fight.

 

It’s also true that English court judgements are often enforceable outside the UK, but typically it’s better to sue someone where they (and their assets or money) are. But that’s not a hard and fast rule, so do take specific advice in advance if you are entering into a contract that carries significant risk for you with an overseas client.

 

You can keep your options open as to whether you will sue in England or abroad by making the court jurisdiction non-exclusive, even though you could keep the contract under English law. To do that, in the Booking Form box which says “Special terms for this Booking” you should put “This agreement will be governed by English law and subject to the non-exclusive jurisdiction of the English courts.” By making the court jurisdiction ‘non-exclusive’ rather than ‘exclusive’ (which is what the template terms say), you open up the possibility of suing in a non-English court.

 

by Christopher Head

Christopher Head

Christopher has spent his life helping business owners manage and contract the people they pay, and deal with legal risk. His focus is on creating contracts and relationships that work for your business, and giving you a full set of tools for tackling problems swiftly and economically. Christopher qualified as a barrister before co-founding Irenicon (a specialist HR and employment law practise) in 1980. He has also worked as company secretary and legal counsel in an international public company.

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