The Importance Of Terms & Conditions
Whilst understandably not the sexiest part of setting up a new business, having robust terms in place is absolutely essential when a new business begins trading and should therefore be a priority for business owners. Terms & conditions protect your business and create certainty as to each parties’ rights, duties and responsibilities. Furthermore these terms can be relied on when things go wrong, for example to deal with issues surrounding late payment or cancellation of a contract.
The following are key areas which should be generally be covered in a business’s standard terms & conditions:
- Definition of the goods and/or services to be provided
- Guarantees and/or warranties
- Termination/notice period
- Governing law
There is no legal requirement to include terms & conditions on invoices. However, it is common practice to include your terms on the back of invoices or to direct customers to the policy on your website.
Time taken on drafting effective terms & conditions at the outset will ultimately be time and money saved dealing with needless disputes in the future.
Thoughts for an Online market place
If you operate a website, there are generally three essential documents needed to protect your business.
- Terms & Conditions of Website Use –containing the main set of terms governing the relationship between you and your customers.
Terms & conditions … Keep It Simple
Moral of the story: keep all terms & conditions as clear and concise as possible.
No ‘One Size Fits All Approach’
No two businesses are the same and it is therefore important that your terms & conditions reflect your specific business needs.
How to successfully use Terms & Conditions
To be incorporated properly, your standard terms & conditions must be put forward to your customer before the contract with them is made. If you are mentioning your standard terms on, or attaching them to, your invoices, that on its own is not going to work. Your customer needs to be aware of your standard terms, and not give any indication that they reject or object to them, before or at the point the contract is formed. Invoices are usually issued after the point when the contract was actually made.
When is the contract formed?
In simple terms, a contract is formed when an offer is made by one party and is unequivocally accepted by another party in words or by conduct. Usually this is when you accept your customer’s order.
Practical tips to make sure your standard terms & conditions apply:
Simple steps can be put in place as part of your trading and sales processes to maximise your chances of your standard terms forming part of each and every B2B customer contract. Although none of them, on their own, are guaranteed to be successful, the more steps you implement, the better your position will be:
- Bring your customer’s attention to your standard terms and conditions in as many ways as possible (e.g. give them a copy, reference them in brochures, catalogues, on your website, quotations, delivery notes, invoices etc.)
- Always, always accept customer orders in writing stating that the order is accepted on your standard terms and conditions, attaching a copy of them or telling your customers where to find them (e.g. on your website).
- Consider preparing a standard order form for your customers to use, which sets out your standard terms and conditions on the back.
- Put procedures in place to make sure that your business does not act on a customer’s order (that is, accept a customer’s offer) without first sending the customer your written order acknowledgement, as above.
- Consider whether your staff or sales teams need some training on the importance of putting forward your standard terms and conditions and the need to adhere to your sales and order processing procedures.
- As a contract can be formed verbally, make sure that any discussions with customers (over the telephone or face to face) are expressed to be on the basis of your standard terms or “subject to contract” (that is, will not be binding until a written contract is entered into).
- Lastly, when introducing new or updated standard terms, a copy should be sent to every customer informing them that the new terms will apply to all future orders.
If you need some help in setting up these processes, or checking that they are sufficient, contact your legal advisors.
Whilst templated ‘standard-form’ documents have been provided for free on the Yorkshire Powerhouse website to assist with protecting your business, these should be used as a starting point only and should be amended as required. Please note that our templates are designed for business–to–business transactions. If your customers are individuals (as opposed to businesses), we recommend that you seek formal legal advice.
Yorkshire Powerhouse – helping out with Terms & Conditions
Have you any questions?
Here at Yorkshire Powerhouse, we’re happy to help as much as possible – is there anything else we can do to help you, do you have any further questions or can we help introduce you to an expert – please let us know:
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