Is it time to update your business terms and conditions?
Using standard business terms and conditions certainly has its advantages, but you must ensure the terms are commercially appropriate for your business and are up to date with current legislation.
The use of a suitable set of standard terms and conditions of business offers a number of clear advantages for a business. It offers the convenience of having a set of terms in place which can be used regularly, avoiding the time and expense involved in drawing up specific terms for each individual transaction and providing certainty that the business will be trading on broadly consistent terms in each case. It enables a business to introduce contract terms that are advantageous to it, in a format that leaves little room for negotiation. It can also allow the development of standardised contracting procedures, which in turn means that more junior staff can be trained to handle and conclude contracts.
Where goods or services are regularly provided on credit, a tailored and well drafted set of terms and conditions can help to reduce instances of late payment, enable charges to be imposed for late payment and reduce the costs and time required for debt collection and for resolving disputes.
When looking to update or implement new standard terms and conditions, it may be tempting to search the internet and download a template. Several pages of legally worded clauses might appear like a good solution. However, this option will invariably have two inherent flaws: 1) the commercial terms in the template, for example payment terms and how delivery is to be effected, might not have been customised to your industry sector and might not correctly reflect the way you conduct your business in practice; and 2) the template is likely to include a fair number of clauses that are either not needed or not up to date with current law. Without knowing exactly why, when and by whom the terms were drafted, how will you know you can rely on them to work in practice? Will they be upheld in court in the event that you need to enforce them?
Even the best set of terms and conditions drafted specifically for your business will only be effective if it can be shown that both parties intended for such terms and conditions to form part of the contract. Seeing as standard terms are not often signed by the contracting parties and are typically set out on the reverse of other documents used in relation to the transaction, such intention is not always easy to demonstrate. Bringing your terms and conditions to the attention of the other party at the earliest opportunity, in as much of your pre-contract and contract documentation as possible, is therefore essential. This could be in brochures, catalogues and quotations, and on purchase order forms, acknowledgements or confirmations, delivery notes, invoices and websites.
Where both parties try to contract on their own standard terms by referring to them in their transaction documents, this is known as the ‘battle of the forms’. In these circumstances, the ‘last shot’ doctrine usually applies to determine which terms govern the contract, so that the last document or statement exchanged by the parties that was not explicitly rejected by the recipient will prevail.
Solicitors specialising in commercial law will be able to draft new terms and conditions, or check and update your current terms and conditions, at a reasonable cost. With knowledge of recent commercial and consumer protection legislation, they will be able to ensure that your terms and conditions are up to date and compliant with current law. They will often be able to advise also on drafting and procedural tactics your business can employ in order to help strengthen the chances of contracts being regularly formed on the basis of your own (and not the other party’s) standard terms and conditions.
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