Chapter 5Non-corporate organisations – sole traders and partnershipsabove provisions do not apply to business names and a
passing off action would have to be brought (see below).
This is a difficult and often expensive claim. However,
if the name is in the nature of a trade mark it can be
registered and protected more easily. The Trade Marks
Act 1994 has extended this possibility particularly in
allowing registration of geographical locations, e.g. ‘The
Barbican Tandoori’. Thus, where persons trade in a
name which includes a geographical location, as where
J Singh does in fact trade under the name of ‘The
Barbican Tandoori’, the name can be registered under
the 1994 Act and will be easier to protect (see further,
Chapter 15 ).
Passing off
A sole trader must not run his business under a name
which is so like that of an existing concern that the pub-
lic will confuse the two businesses. Similarity of name is
not enough; usually the two concerns must also carry on
the same or a similar business.
If this does happen, the sole trader will be liable to a
civil action for the tort of passing off and the existing
concern can ask the court for an injunction to stop the
use of its name. If it is successful in getting the injunc-
tion and the new organisation still carries on business
under the confusing name, its owner is in contempt of
court and may be fined or imprisoned until he complies
and changes the name of his business.
However, a sole trader may do business in his own
name even if this does cause confusion, provided that
he does not go further and advertise or manufacture
his goods in such a way as to confuse his products with
those of the existing concern or operate to deceive the
public.
Thus in Asprey & Garrard Ltd v WRA (Guns) Ltd
(2001) the claimants were a well-known and established
trader in luxury goods in London. The defendants traded
in the same line of business, also in London, under the
business name of William R. Asprey Esq. William Asprey,
who was formerly employed by the claimants, effectively
controlled the defendant company. The High Court
granted an injunction against passing off and infringe-
ment of the claimants’ trade mark. The court dismissed
the defence of own name on the grounds that it is any-
way an exception to the passing off rules and must not
as in this case cause deception. Although the problems
in the above case arose from the use of a business name,
the same principles would apply if the defendant busi-
ness had been run in the name of Asprey as a sole trader,
partnership or company name.Dissolution
Our sole trader, whom we shall call Fred Smith, may decide
at any time to retire from the business and dissolve it by
selling off the assets of the business to other tradespeople.
Alternatively, the business may be sold as a going con-
cern to another trader and continue under him.
Apart from the legal formalities involved in selling and
transferring assets, for example conveying shop premises
to a new owner, there are no special legal difficulties
provided all the debts of the business are paid in full.
However, if Fred cannot pay his debts, he may be forced
to dissolve his business by his creditors under a process
called bankruptcy.Debt recovery
Before proceeding to look at insolvency procedures it is
worth noting what is available to recover debts before
taking the ultimate step which is to put insolvency pro-
cedures in train.
If Fred’s creditors have tried all the usual ways of
recovering their debts, e.g. statements, solicitor’s letters
and so on, they may think about suing Fred in the county
court. The jurisdiction and procedure of that court have
already been described in Chapter 3.Interest on debt – generally
As regards the payment of interest on debt that the court
can award as part of the judgment, we must first look at
the contract to see whether there is any provision for
interest. If there is, the court will follow the provision in
making its award.Late payment of commercial debts
legislation
The Late Payment of Commercial Debts (Interest) Act
1998 gives creditors a statutory right to claim interest from
debtors on debts relating to commercial contracts for