Fast Moving Consumer Goods (FMCG) are items that usually sell very fast and often for very cheap. This includes products such as food, beverages, stationery, toiletries, and over the counter medicines, amongst other similar consumable products, which fit under the umbrella of FMCG.
Since these items are sold in large amounts and have quite a big consumer base, these industries are tightly regulated in order to protect the interests of the corporations and the consumers.
Outlined in this article are 6 legal documents you will need to safeguard yourself or your business against liabilities.
1. Product Specifications
Product specifications are documents that act as agreements between you and your supplier and/or manufacturer. These will define the particulars of your product.
It can be seen as the appendix to the document of a manufacturing agreement.
Product specifications can include, but are not limited to:
- Key product information;
- Barcodes;
- Case configurations;
- Packaging information;
- Microbiological information;
- Recipe information;
- Allergen information;
- Metal detection requirements; and
- Labelling information.
If your company does not have a product specification document for any given product, it leaves room for potential lawsuits. Having product specifications and safety rules in writing is very important such that whenever something goes wrong (or has the potential to), your company and/or product has something to back themselves with. It is ideal for your business to have appropriate product specifications to avoid any future liabilities.
2. Terms and Conditions
Terms and conditions, commonly known as T&Cs, details exactly what is included in the services a company offer. In the case of FMCG, this also details the elements included in the products offering of the company. Having strong and intricate terms and conditions, despite less than 1% of the people reading it, helps act as a legal safeguard for the company, by detailing how payments are made, returns and refunds, and the repercussions of breaking these conditions. This ensures that the customer understands exactly what to anticipate from your company’s products and services.
Furthermore, T&Cs also enable business to meet specific legal obligations and duties, such as declaring a customer’s right to cancel. In case of a legal disagreement or dispute, a terms and conditions document will be the primary case of reference used by the court, so it is of utmost importance for this document to have material that is presented thoroughly and correctly.
While conventional T&Cs of goods exist, and are readily available on the internet, it is advisable for businesses to get legal guidance so that their T&Cs are as tailored to their organization as appropriate. T&Cs are not only vital from a legal standpoint, but they also give the business a professional appearance and increase its attraction to clients.
3. Employment Contract
When a new employee joins a firm, they are offered a contract that allows both the management and the staff to legally assert their interests and obligations. For various responsibilities inside the company, separate agreements may be necessary. Senior members of the team, for example, will often have lengthier employment contracts than junior members of the team.
Typically, employment contracts include:
- Names of the employer and the employee;
- Title of the job and its description;
- Date of employment commencement and date of continuous employment;
- Income and how frequently the employees are to receive their salaries;
- Details of the working hours, plus the workplace location;
- Sick paid leaves, holidays, and the provision of pension
- Notice period;
- Date when contract based or fixed-term work ends, if applicable; and
- Any other collective agreements that may directly affect the T&Cs of employment.
To reduce the probability of dispute, these legal agreements should be as detailed as possible, guaranteeing that all parties are aware of the parameters of the agreement. If a problem arises, this agreement will assist in resolving the dispute internally, avoiding the need for legal action that would cost the FMCG company a lot of money.
4. Sale Agreement
The main difference between a sale agreement and a sale deed is that the former indicates that there is to be a sale and the latter confirms that a sale has been made. It is important to have a sale agreement in which to safeguard potential buyers and sellers, such that both parties are treated fairly.
A sale agreement usually contains:
- The price at which a product is to be bought;
- The date of finalising the sale;
- The amount of money to be put forth to count for a deposit; and
- List of products included in the sale.
Irrespective of the type of company you own, having a formal agreement in place will ensure that your operations run efficiently until the products and money for the same have been exchanged. Sales contracts can be utilized both for purchasing and for selling products and/or services. Help for drafting wholesale agreements can be found in this resource.
5. Shareholders’ Agreement
The partnership between your company’s shareholders is governed by a document known as a shareholders’ agreement. A shareholders’ agreement dictates how the company is to be operated, while also making sure that the shareholders are justly treated and that their interests are in line with the company’s interests.
When drafting a shareholders’ agreement, it is wise to have a lawyer present. When it’s being signed, make sure that every shareholder signs it. A shareholders’ agreement will safeguard you, other shareholders, and your business if something is to go wrong in the future.
6. Manufacturing Agreement
Ideally, you and your manufacturer should have a formal manufacturing agreement that describes all the parameters under which you will collaborate. It can, however, be tough to persuade manufacturers to consent to one of these agreements.
A manufacturing agreement includes things like:
- The minimum order quantity;
- Lead times;
- Specifications of the products;
- Source of the raw materials;
- Capital investment amount; and
- Price of the product.
A manufacturing agreement must follow FMCG law and must be signed on both ends by all people involved, so it is wise to have a lawyer get involved when creating a manufacturing agreement.
Key Takeaways
- Mention Product Specifications of what you sell
- Draft a thorough and detailed Terms and Conditions document
- Draft an honest and straightforward Employment Contract
- Draft Sale, Shareholders’, and Manufacturing Agreements to avoid liabilities
Hire an FMCG Lawyer
While covering all legal grounds may be a bit overwhelming as an FMCG business owner, it’s also quite necessary. This legal guide for FMCG owners does a good job at outlining 6 legal documents you need and why you need them, but at the end of the day, you require the help of legal experts in order to draft these documents.
Regardless of which document you require help or advice with, the FMCG lawyers at Lazarus Legal can aid drafting contracts, but also negotiating legalities that a you would rather not.
Lazarus Legal is a reputable law firm with highly skilled and experienced attorneys and lawyers who can assist you with a variety of commercial and legal matters. Contact us today to learn more about how we can assist you with legal issues.
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Mark Lazarus
Mark Lazarus, the visionary behind the business and the fresh blood of the Lazarus Legal team, Mark (or Laz as he is often known) owes much of his success to his past experiences. And he’s made it his personal goal to bring that wisdom and formula to the firm.
