On whose Standard Terms and Conditions of Business will you be trading in the New Year

Addressing the following fundamental issues could be the difference between your company’s survival and downfall in 2009:

• Being able to enforce your payment terms
• Minimising your liability to customers
• Avoiding recurring problems with good contracting procedures
• Retaining ownership of goods until payment is received in full
• Sorting out what happens in the event of a dispute.

Terms and Conditions (T&C’s) are often used by companies where a certain type of transaction governs their day-to-day trade, the terms of which contain common elements. They are typically used in the sale of goods or services.
All too often, companies only review their T&C’s when their products or services have caused damage to others, by which time the company may find that it has not protected itself as much as the law permits, and pays the price. Due to this reactionary approach, it is not uncommon for many companies to issue quotations or accept orders using T&C’s that are outdated, unenforceable, copied from competitors, or even superseded by its customers’ own T&C’s.

T&C’s determine how transactions with customers take place and allow companies to avoid the costs involved in drawing up contract terms for each transaction. This standardisation of contracting procedures allows companies to benefit from economies of scale, by, for instance, allowing contracts to be concluded by more junior staff. Putting T&C’s in place allows companies to limit their liability when faced with a claim and therefore affords them the certainty of knowing their potential exposure whilst allowing them the benefit of trading on their own terms.

Having T&C’s in place alone, however, will not suffice. Drawing up T&C’s is a pointless exercise unless proper procedures are in place to ensure that the company's T&C’s are effectively incorporated in each contract with its customers. To achieve this, sellers must ensure that their T&C’s are brought to the attention of customers as soon as possible. In practice, this will mean that T&C’s should be set out in brochures, quotation forms, confirmations of order, and any other publications of a seller of goods or services including correspondence with its customers.

A common pitfall is to print T&C’s solely on invoices. This measure alone is not enough. Despite there being no minimum threshold to ensuring that you are trading on your T&C’s, it is a question of doing as much as commercially possible and putting consistent procedures in place in order to communicate your T&C’s to customers as often, early and clearly as possible.

The above should provide your business with some pointers as to how you can ensure that your T&C’s are the best possible and incorporated in your contracts with your customers, but if you require more detailed information on this topic, please contact Renato Peral at Raworths Solicitors LLP.

The Legal Column is sponsored by Raworths Solicitors of Harrogate. To contact Raworths, telephone 01423 566666 or visit our offices at Eton House, 89 Station Parade, Harrogate HG1 1HF. Alternatively, visit our website on www.raworths.co.uk or email renato.peral@raworths.co.uk