Terms and Conditions of Business

Do you sell goods?
Do you sell services?
Do you hire out goods?

If your business carries out any of these, there will be a contract between you and your customer.

Contracts can be verbal or written, but the terms of verbal contracts can be difficult to prove in the event of a dispute. A well managed and risk aware business will always ensure that its contracts with its customers are covered by its own terms of business.

Often the terms of business are standardised, and are often known as ‘terms and conditions’ or ‘t&cs’.

In order to ensure that your t&cs apply, your customer must be made aware of them before the contract is made. Placing the t&cs on the back of your invoice is not an effective way of doing this. You must send the t&cs to your customer in advance, preferably with your quotation/estimate.

In some business to business (B2B) sales, the buyer sends a purchase order for goods. If the seller accepts this, the buyer’s t&cs usually apply to the contract – and this can have disastrous consequences for the seller. Buyers often try to impose guarantees of quality, delivery times, risk provisions, rights to return the goods and similar terms which may not be expected by the seller.

The t&cs imposed in a purchase order should be considered very carefully before the order is accepted, but this is rarely done. If you wish to ensure that your t&cs apply to the contract with your customer, the person dealing with your orders will need to know how to respond to a purchase order in order to achieve this.

Sellers are often tempted to try to limit or even exclude their responsibilities or liabilities in their t&cs. However, there are statutory and other legal limitations and obligations which can render badly drafted provisions entirely ineffective.

For example, if a dispute arises with a customer, you may want to rely on a clause in your t&cs which excludes or restricts liability. If the matter proceeds to court, the court may decide that the exclusion clause is unreasonable under the Unfair Contract Terms Act 1977. If so, the clause would be unenforceable, and you would have no protection. It might be better for you to reduce the level of your protection in your t&cs in order to increase the likelihood that your exclusion clause remains enforceable.

Whether your contract is individually negotiated, or it is a standard contract, if it is well drafted, you should achieve a much greater level of protection for your business.

Contracts with consumers are subject to particularly broad restrictions, and currently there are about 10 statutes and sets of regulations which affect them.

Consumer Contracts

Currently the law relating to consumer contracts is being revised and a new draft Consumer Rights bill has been published. This is likely to become law soon.

Contracts made over the telephone or in a consumer’s home or at their place of work, usually give to the consumer a cancellation period, which generally starts only when the consumer is given certain statutory information.

There are regulations affecting consumer contracts which demand that the terms should be fair, and written in plain and intelligible language. There are also lists of potentially unfair terms.

If you need any assistance with the preparation or revision of your terms of business, whether you are dealing with businesses or with consumers, please contact the commercial team at Fraser Dawbarns LLP. We can prepare terms and conditions which meet the particular requirements of your business, and have experience of doing so for many businesses.