Whether you provide services or goods, your terms and conditions regulate the relationships that you have with your customers and suppliers.
As the law changes, and your business and customers change, so must your terms and conditions so that they can continue to protect your business and ensure that you are in a strong position just in case anything should go wrong.
You may need more than one set of terms if you are providing and receiving services and both sets of terms ought to be fair but should favour you and the way you do business.
You may do a lot of business on line. You will perhaps need a different set of terms of business for your on line contracts. You may need your web site manager to provide a tick box so that the customer can verify that it has read and agreed to your terms and conditions.
And this is the most important matter of all. Your terms and conditions must have been seen, agreed and understood. Terms that are not shown to the customer cannot be applied later. Saying that terms and conditions are available on request or on line is not going to be effective. You need to ensure that the client/customer has seen the terms. Secondly they need to be agreed. If the customer, having read the terms tells you that he agrees but cannot pay within 21 days, he will need 40 days, then your agreement will have varied the new terms and should be recorded in writing. You must decide whether you want to do business with any customer who might offer a variation of your terms of business and if you are prepared to vary the terms, it needs to be recorded. Finally, terms and conditions provided in a font too small to be read or be legal language too convoluted to be readily understood are likely to be difficult to enforce. If a client/customer is not fluent in English, the terms and conditions will need to be explained and you need to ensure that both parties understand the agreement that is being struck.
What should be included?
The basis of the contract is of primary importance. You need to clearly state what you are going to do/provide and what you expect in return.
Misunderstandings between parties who have failed to clearly set out what each party should do is the source of endless contract disputes that help to pay my mortgage. Such disputes could easily be avoided by a clear explanation as to what each party’s obligations are. Whilst I might be homeless I do rely upon people failing to explain their hopes and expectations in clear understandable language.
It is helpful to clearly state that whatever has been agreed is the entire agreement so there can be no misunderstanding regarding extra services or hidden agendas.
Customer’s obligations. This is usually payment, but you might want other things too. Perhaps you want your logo to remain on the goods or you may be expecting recommendations or that any resale of goods is limited to a geographical area. If someone buys your stock and then starts to resell it to your other customers, there is no point complaining unless you have an agreement preventing such actions.
And payment is important. And needs to be detailed. You want payment by a certain date, in a certain currency, in a specific bank account. Interest cannot be charged for late payment unless it has been agreed in the terms and conditions. Penalties for late payment should be specified. Any complaints and you can explain that the penalty can be avoided by prompt payment. Do you need a personal guarantee from the directors in case your client finds itself in financial problems and you find yourself on a list of creditors wondering whether to accept 10p in the pound as the best you are likely to recover?
Confidentiality. You may want to provide a sweet deal to one customer on better terms than you would normally provide. If so, you do not want your client/customer telling your other customers that they are paying over the odds. Any contract should remain confidential between the parties involved.
Limitation of Liability. There is new and ever-changing law protecting consumers from unscrupulous service and product providers, but that does not prevent you protecting your business from potential liability. You are in a much stronger position should there be a complaint if the complainant has agreed, through your Ts and Cs to limit your liability.
Get out of Jail Clauses: Termination and Force majeure. Further protection can be provided with a strongly drafted termination clause which allows you to withdraw from the contract in certain circumstances (including of course non-payment). However, if your supplier or manufacturer goes out of business, then you may wish to protect any obligations you have to your customers by their agreement to termination.
Force majeure should cover all of the circumstances outside of your control, although to be fair, this can be a reciprocal clause protecting all parties from various acts of god which might affect the obligations of the parties.
Governing Law and Jurisdiction. You really do not want to sign up to a client’s terms of business if the governing law is Croatian and that the jurisdiction are the Courts of Lazio in Italy. If you want the cheapest and most effective method of enforcing the terms of your agreement, wherever and to whomsoever you are providing services. Make sure you are doing so on your territory and in a language, and traditions that you are fully alive to and aware of. Several times a year I see people looking for help and a glance at the contract results in my having to explain to the client that they need a lawyer in Dresden or Lisbon, because they failed to consider the terms that they were signing up for and thought the EU had a common legal policy which it has not.
So what do you need to do?
You need to ensure that your terms and conditions are fit for purpose and ask:
Do they cover all eventualities?
Are they up to date?
Do you need more than one set?
Should they be bespoke?
What would happen if something went wrong?
And could my business survive?