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Are your business’s standard terms and conditions worth the paper they’re written on? Are your business’s standard terms and conditions worth the paper they’re written on?

News / Articles

Oct 13

Are your business’s standard terms and conditions worth the paper they’re written on?

Written by John Carter

DDI: 01423 724620
E: john.carter@raworths.co.uk

As the economy continues to show signs of recovery there is a growing feeling of optimism amongst businesses of all sizes.  However, it is crucial that businesses do not overlook the detail in their dealings with customers.  Businesses need to give themselves the best chance of success and one way of doing this is to have standard terms and conditions of business (Ts&Cs) in place.  Effective Ts&Cs can address crucial issues, such as:

  • limiting your liability to customers if something goes wrong;
  • being able to enforce your payment terms;
  • setting out your customers’ obligations (eg: confidentiality obligations);
  • retaining ownership of goods until payment is received in full;
  • determining how or when the contract will come to an end;
  • setting out what happens in the event of a dispute; and
  • avoiding recurring problems by implementing good contracting procedures.

Ts&Cs are typically used in the sale of goods or services where the sale terms contain common elements.  They can also be imposed as terms of purchase to put you in a better position when buying goods.

All too often businesses only review their Ts&Cs when their products or services have caused damage or loss to others.  By this time the business may find that it has not protected itself as much as the law permits and so pays the price.  Many businesses issue quotations or accept orders using Ts&Cs that are outdated, ineffective, unenforceable, or superseded by their customers’ own Ts&Cs.

Ts&Cs determine how transactions with customers take place and allow businesses to avoid the costs involved in drawing up contract terms for each transaction.  This standardisation of contracting procedures also enables contracts to be concluded by junior members of staff.  But the most important benefit is that Ts&Cs allow businesses to limit their liability when faced with a claim and the certainty of knowing their potential exposure when things go wrong.

However, simply having Ts&Cs in place will not suffice.  Drawing up Ts&Cs is a pointless exercise unless proper procedures are in place to ensure that the business’s Ts&Cs are effectively incorporated in each contract with customers.  To achieve this, businesses must ensure that their Ts&Cs are brought to the attention of their customers early in the negotiations.  In practice, this means that Ts&Cs should be set out in business’s publications such as brochures, quotation forms, confirmations of orders, and in correspondence with customers. A common pitfall is to print Ts&Cs solely on invoices.  This measure alone is not enough.  Your Ts&Cs are unlikely be binding and so will not govern the contract.

If you require assistance drafting new Ts&Cs or to discuss other ways in which Raworths can assist your business please telephone 01423 566666 or visit our office at Eton House, 89 Station Parade, Harrogate HG1 1HF.  Alternatively, please e-mail john.carter@raworths.co.uk

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