Business Terms and Conditions
Solicitors offering experienced, practical and cost-effective advice and drafting to ensure you have the right terms and conditions of trading for your business.
Most businesses understand the vital importance of contracts but many make the mistake of thinking that obtaining a template or copying a competitors standard terms and conditions will suffice as a cheaper alternative to using solicitors.
Another very common mistake is to seek to include every conceivable exclusion or limitation of liability in your contracts so as to seek to avoid or minimise any problems or to include severe penalty clauses for any breach by the other party. The third significant risk arises from having contracts which you don’t really understand. If you don’t understand your own contract, you may struggle to deal with issues such as variations, how to deal with a breach of contract or how to react if a client, customer or supplier attempts to negotiate on the terms of your contract.
Key issues with terms and conditions for business
- Battle of forms – what happens if you submit your t’s and c’s to a customer or supplier and they also send their t’s and c’s to you. Which will apply?
- Business to business or business to consumer contract? – if you are dealing with consumers, they will have a number of statutory rights and exclusions and limitations of liability you might otherwise include may not be valid if included
- Risk of varying the contract by words or conduct – it is a common misconception that a contract in writing can only be varied in writing. Many people also believe that a formal contract can only be varied by a formal variation. This is also often incorrect. Risks can include inadvertent variations by email or verbally, possibly by staff who appear to have authority but may not in reality. Contracts can also be varied by conduct which is inconsistent with the agreed written terms. It is worth also remembering that contracts can only be varied with consent, which can also be implied.
- Terms relating to breach of contract – there are many potential traps for the unwary innocent party where the other party is in breach of contract. For many types of breach, the innocent party may not have the right to simply cancel the contract. On the one hand, the innocent party faces risks of acting too quickly in response to a breach, but if that same party also delays acting or responding to the breach, he, she or they may be considered legally to have accepted or waived the breach. Good terms and conditions should be clear about different types of breach, implications and that there will be no waiver of breach. Care is also needed to ensure that the contract does not include penalty clauses which are disproportionate to a breach, as such clauses may also be held by a court to be unacceptable and struck out.
- Which terms of the contract are fundamental terms? – it is best to be specific about which clauses are the most important, or fundamental to the contract. This has implications for breach. A breach of a fundamental term offers different options for the innocent party.
- Industry-specific – each different type of business, whether supplying goods or services, will include different industry or sector-specific differences. Lawyers need to understand and cater for those different nuances.
- A clear definition of what products or services will be provided – even though many terms and conditions include a standard set of terms, many will also have a specification section which will include the most important specifics for that particular assignment, especially with service contracts and building contracts. In some cases, schedules or specifications will contain the most important clauses, so care will be needed not to assume these are standard and to include sufficient specifics.
- Responding to another party’s terms and conditions
- Setting out the payment terms – when is payment due? what happens if payment is late?
- Any guarantees or warranties offered?
- Timelines for delivery – should time be of the essence? i.e a fundamental terms of the contract
- With service contracts, the specific terms of the agreement and what notice is required to get out of it.