Strike a deal in no uncertain terms
Drawing up written Ts & Cs when embarking on a new business relationship can save a great deal of trouble, says Simon Groves
When doing business with any customer it is important to have terms and conditions (Ts & Cs) in place. These are essentially a contract that forms the basis of the trading relationship and establishes what each party expects from it.
Unfortunately many businesses do not bother with written terms and conditions, believing that an informal agreement and a handshake will suffice. If you don’t have written contract of Ts & Cs from the start, or if they are unclear, and the trading relationship then goes sour, you may find yourself tangled up in a dispute that could cause you hassle and leave you out of pocket. Proper Ts & Cs will provide a certain amount of security and protection and limit your liabilities towards your customer.
The contract is fairly straightforward, and most standard Ts & Cs are similar from company to company, but it makes sense to get a solicitor to draft such a document to ensure it is fair and legal. Examples and templates for Ts & Cs are widely available on the internet and can be adapted for your own use. However, if you do not use a legal expert there is always the danger that a flaw in the text could leave you unprotected if you need to enforce the contract in court.
Normally Ts & Cs cover topics such as price, quality of supplies, arrangements for delivery, the process to be applied if supplies are defective, and increasingly, policies regarding the consumer’s privacy. Importantly, Ts & Cs also include limitations on the seller’s liability, setting them at realistic levels without exceeding the limitations allowed by law. For example, they can prevent the buyer from recovering anything more than the contract price in the event of major problems on the seller’s part.
You may also want to include a clause that states that your business retains ownership of the product you have supplied until the customer has settled the bill in full. This is called “retention of title” and can be very useful in helping you claim back goods if no payment is received.
With the huge growth in online trading, specialised Ts & Cs are required. If your web offering is based in the UK your contracts must comply with both domestic and European Union rules, and if you want a merchant account to accept credit cards online, the bank will need to see your Ts & Cs.
Payment terms should also form part of this contract as it is vitally important to agree how and when customers pay you at the start of any new business relationship. In addition, your payment terms should also be included separately on each invoice, so they apply to every sale you make.
Your customers may also want you to sign their Ts & Cs. In that case, remember that you can challenge any contract imposed upon you that seeks to remove your rights to claim late payment interest and compensation, or that tries to increase the length of time your customer has to pay bills.
Most important of all, to be legally binding your Ts & Cs must be agreed and signed by the customer at the onset of any relationship and before any goods are supplied – and ideally before you start any work for that customer. Not only does this give your customers a chance to discuss any issues they may have, but it also means you are protected from day one.