TNLP

They had an excellent business plan, great team, highly connected and the was set to be successful. They landed a major contract with a Multinational. They were to provide logistic services with respect to the importation of raw materials. Little did they know that the was going to cause great damage to their Business.

As common place in so many contracts, it was agreed that: “This contract does not create an or relationship between the parties”.

However, in actual fact the role they were to play entailed acting as an agent of the Multinational.

They took a and opened a for the raw materials to be imported. Owing to a significant devaluation of the Naira, the amount they were to repay for the Loan had doubled.

However, the Multinational refused to renegotiate the amount to be paid. Of course, paying back the Loan came with so many challenges. Thus, impeding the growth of the Business.

Always consider the implication of stating in your agreements that an agency relationship does not exist between your Business and parties you enter into agreements with.

Sometimes, an agency relationship should be said to exist.



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X Limited, a food company, has been receiving notices from different suppliers of its raw materials, stating that as a result of the -19 pandemic and government restrictions, they cannot fulfill their contractual obligations. With this, the business is unable to fulfill its own contractual obligations like loan repayments, rent, salaries, supplies etcetera.

In order to manage its arrangements and losses to the business, it is necessary to do the following:

i. Take stock of all supplier contracts that the may affect and consider their impact on the business and contractual obligations;

ii. Review existing supplier and take note of any potential barriers to a successful claim for non-performance.

iii. Check whether Majeure or can INDEED be relied on as a basis for their non-performance.

iv. Monitor for breaches and take steps to enforce the contract where the obligations of the suppliers cannot be said to be affected by Force Majeure or Frustration. This is necessary to forestall a situation, where waiver of a could be said to have been made.



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COVID 19 - HOW TO DEAL WITH LOAN REPAYMENTS

While taking out a loan, a lot of businesses did not contemplate a global pandemic. The inability of businesses to carry out their operations, economic downturn, etcetera, are affecting the revenue base of businesses and their ability to service loans. If your business is undergoing this, some of the options that could be explored are:

i. Stay informed and take benefit of palliatives by financial institutions and the government. For instance, GTBank has given a 90-day moratorium on repayment of loans such as food industry credit, fashion industry credit and Quick credit for Business;

ii. Speak with your Lender. It is in the interest of your to prevent your business from going insolvent. You could negotiate an extension of the principal repayment date; a break from monthly interest payment; a review of what constitutes an event of default in your agreement;

iii. Consider refinancing the loan. Where your lender is not willing to assist you, you can take another loan from a different lender and use that to repay the existing loan. However, ensure that you are capable of meeting the terms of the new loan, to avoid further challenges.

Is it possible to start a business without debt?

Yes.

Start with what you have.

What gifts, talents, relationships, goodwill and resources do you have?

Start with them and watch your empire grow.

Focus on sales and reduce expenses.

Provide good value and service to your clients/customers.

You will not be dealing with the burden of debt, when you should be concentrating on growing your business.

You can start your business without Debt.

Imagine running a where you are not owed revenue by your clients and your business is not servicing . Sure, this will be bliss! This month we will be discussing how your business can collect all its receivables and stay debt free. Please come on board as we discuss, dissect, analyze and advise you on this menace that has incapacitated so many businesses.

Cheers to a great month!