Successfully using B2B Terms and Conditions
“When it came time to be a professional rapper, I wouldn’t sign anything without reading it. There was no way I was going to have people make decisions for me or wake up one day and find that I was broke because I never bothered to read a contract.” – Queen Latifah
Having your own terms and conditions is just the start…
… you must use them properly for them to protect your business.
So, you’ve now got some good terms and conditions that are suited to your B2B business and reflect your specific business needs, but how do you use them properly?
Standard terms and conditions will always apply, right? Wrong.
Your standard terms will only be effective if they have been successfully incorporated into the contracts with your customers. Unless you use your standard terms in the right way, so that they form part of those B2B contracts, when it comes to the crunch you won’t be able to rely on your standard terms to protect your business.
What do I need to do?
To be incorporated properly, your standard terms 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.
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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 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.
After putting in the time, cost and effort to prepare your standard terms and conditions, make sure that they work for you and can protect your business when they need to.