Does your customer know who they are dealing with?

If you have set your business up as a Limited Company, doubtless you will know that one of the advantages is not being personally liable for financial losses if things go horribly wrong (unless there is an element of fraud).

However, this protection could be lost if you have not made it clear to the consumer that you are a Limited Company. This can happen when a trading name is used but the trader fails to comply with the requirements of the Companies Act 2006 to include the company’s official details on their website and invoices.  

By way of example, one of our dealers was taken to court re an allegedly defective vehicle. The sale had taken place a week before the dealer closed his previous Limited Company and started a new one. The trading name was not changed.  

Our first line of defence was that the consumer bought from the previous Limited Company which was now dissolved and so there was no liability. However, the judge was not convinced as the sales invoice only had the trading name and no details at all of the Limited Company. It should have said that xxx is a trading name of xxx Limited and it should have listed its registered number, its registered address and stated it was registered in England. This information should have been on the website and all stationary.

Without that information, the judge decided liability fell to the trading name and so our dealer had no defence on that argument. Fortunately, we had a second and third line of defence but without those, the dealer would have become liable for the entire claim and so do ensure that if you want the protection of being a Limited Company, you don’t lose it by not making it clear to your customer, exactly with whom they are dealing.


 

Authors: Nona Bowkis

Published: 25 Jul 2017

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