Every business, whether a large multinational or a simple soul entrepreneur company, should have a set of standard business terms or conditions. This sets out the contract terms between the business and its customers. such an agreement is designed to both limit liabilities and protect your rights.
And in particular,regardless of whether the economy is strong, or in the doldrums, any well run business needs to ensure that they are getting paid on time. Cash is king and to get your money in your bank account at the earliest opportunity, you need really clear terms and conditions.
For specialist advice about getting the right T & Cs, just call us now on FREEPHONE 0800 1404544 or Salisbury (01722) 422300.
Does a contract have to be in writing?
Often, a business supplies services and goods based on verbal or informal agreements. And contracts made verbally can still be binding – a contract does not have to be in writing. Oral contracts can be very risky – especially if large sums are involved. but the real problem with any verbal contract is proving that it exists, and what its terms were. In contrast, if all terms are agreed between both parties and that agreement is clearly set down in writing , there is far less chance of a dispute arising.
And sometimes contracts can be evidenced both in writing (e.g. a series of emails) and in verbal agreements.
Click here to read more about the enforceability of unsigned contracts.
Our commercial law team can help you both with drawing up brand-new terms and conditions – or reviewing – and if necessary, amending any existing T and Cs for small and medium-sized businesses throughout Wiltshire, Hampshire and Dorset from our offices in Salisbury, Andover and Fordingbridge.
You may be surprised by how little it costs for an experienced business solicitor to draft tight terms and conditions for you.
What should my terms and conditions include?
Standard terms and conditions usually include:
· Details of what services or goods will be provided. What are the products or services to be supplied?
· Delivery arrangements. When or where are the goods to be delivered or the services provided? What happens if there is a delay? Who pays for the cost of delivery?
· Terms of payment – often the key term. When are you going to be paid, and how much? Is payment in regular instalments, say monthly, or at the end of the job?
· Credit periods and credit terms
· Data protection clauses
· What happens if the products are faulty or the service not completed or substandard? Who pays for that’s what litigation of any products to be returned?
· Details of interest charged on any late payments – Click here to find out more about how to charge interest on late bills
· Variation of the contract. It’s not unusual for parties to agree to vary the legal obligations in a contract at any time the agreement of both parties. Well drafted T&Cs often contain clauses allowing such variation – but only if both parties confirm such changes to the other in writing.
· Termination clause. If there is an ongoing provision of goods and services, as distinct from a one off supply, then it’s really important to have a properly drafted termination clause. In particular you will properly want a clear way out of the contract if the other side has breached the agreement. And in doing so, you clearly need to set out the circumstances of what actually constitutes a breach of your particular contract
I have heard that terms and conditions need to be transparent. What does that mean?
In simple terms that means that your T&Cs need to be written in plain and simple English – with no jargon or technical words.
Remember, you may understand technical language – but your clients may not. Using technical words would not automatically make your terms and conditions invalid, but in any dispute, if you’ve made those T&Cs unnecessarily difficult to understand, especially if you’re in a stronger position than your client, you risk that client arguing they didn’t understand the contract in the first place. So keep it simple.
T&Cs must also be legible – which means they must be easily readable. So don’t cram them at the bottom of the page in tiny unreadable print.
6 Reasons to Review Your Terms and Conditions
Here are some issues you and your solicitor may want to consider:
1. Make sure that it is your terms and conditions that govern the performance of the contract – not those of your client or customer.
2. Make clear when payment for goods or services is required – this is well worth checking. You may find your current payment terms are far too generous. It’s not uncommon for businesses to state payment is due 30 days after the end of the calendar month when the invoice was sent – that could mean a delay of up to two months before you can even chase for your own money. Reducing your credit period to perhaps just 14 days from the date of invoice could make a huge difference to your cash flow.
3. Don’t forget that you have a legal right to charge interest on unpaid bills – it’s always good, however, to include details of such interest charges in your terms and conditions.
4. Don’t rely on a verbal contract – though it might prove binding, providing proof, if the other party agrees, it can be tricky – see above. You will be much better off if you make sure that your written terms govern any agreement.
5. Check that your terms and conditions are both clear and easy to understand. Whilst you may be able to rely on your terms and conditions in any court case, the value of a transaction may mean it is simply not worth taking legal proceedings – and the whole point of clear terms and conditions is to avoid problems arising in the first place.
6. Ensure that your client or customer is aware of your terms and conditions. There is little point in hiding your terms and conditions away where they will never be read. Making sure your clients or customers are fully aware of your terms and conditions will significantly reduce the risk of any subsequent disagreement between you.
Making sure that you have the right terms and conditions for your business is a critical element in success.
If you haven’t got these six points covered and are looking for an experienced commercial solicitor with plenty of experience of writing bespoke terms and conditions, make sure that you call one of our experienced business team.
Doing without Written Terms and Conditions – the Risks
Starting a new business is often very exciting and making sure you have your own terms and conditions drafted can be overlooked. But doing so can have a disastrous effect on your business.
What do you risk? Fundamentally, if there is no clear agreement with you and any supplier or customer then is huge scope for misunderstanding. You need to cover your back with the right terms and conditions .
What’s more, the doing without T and Cs can create havoc with two simple but critical financial issues – cash flow problems through late payments and wasting money on the necessary debt collection.
Get your terms and conditions right and make sure there’s no place for slow payments from your customers.
And lastly, remember that any contract or terms and conditions may not appear necessary until there’s a problem. It’s a bit like insurance – which can seem very expensive and even unnecessary sometimes, but who would dream of owning a house without insuring it. Getting the right contract or terms and conditions is similar. Cutting corners and doing without T & Cs, can prove catastrophic.
DIY terms and conditions
It’s amazing how many otherwise well-run businesses try to cut corners by simply copying or, worse still, cobbling together their terms and conditions from documents used by other businesses, or cribbed from the Internet.
It’s a totally unnecessary risk. Properly drafted terms and conditions is the bedrock of any successful business.
Don’t take chances by relying on DIY terms and conditions. Get them drafted, or reviewed, by a specialist business law solicitor.
Should we review our existing terms and conditions?
If you drafted your T and Cs yourself, then the answer is definitely yes – get them reviewed by a specialist solicitor.
However even if your original terms and conditions were drafted by a solicitor, you may find that your business, or the market your trading in, has changed and that the terms and conditions that were perfectly suitable when they were drafted, are no longer adequate. If that’s the case – then make sure you get your terms and conditions reviewed as soon as possible.
At Bonallack & Bishop, we are happy to help you draw up terms and conditions for your business to protect your interests.
Watch out for businesses selling to consumers
When a business sells goods or services to a consumer, as distinct from business to business, there are obligations to make their customers aware of their statutory rights. If this kind of information is not provided properly risk severe consequences including giving the consumer and unrestricted right to return any goods and get their money back for up to 12 months.