Wednesday, 12 August 2015
Do your Terms and Conditions work for you?
Terms and conditions are not often a priority for businesses, whether it’s creating new Ts&Cs for a new company or reviewing existing Ts&Cs for an established company.
Here are a few of the main areas to consider when preparing or reviewing your standard terms and conditions of business.
Avoiding a battle of the forms
It is important to establish whose Ts&Cs apply at the point a contract is formed, particularly if your business depends on a series of repeat orders.
The last party to put forward its Ts&Cs, which were not explicitly rejected by the other side, will be incorporated into the contract. It is important to make sure your Ts&Cs are included in the contract process before the contract is formed and to be aware of any Ts&Cs sent by the other party with any counter offers which could then apply instead of your own.
Dealing with conflicting terms
Each business deal may be different and not every term of the Ts&Cs may be relevant. Some standard terms could conflict with any specially agreed terms for a particular deal giving rise to doubt on what was actually agreed.
When a contract comprises more than one document (an order form/invoice and standard Ts&Cs for example) it is important to check that key terms across the documents, such as services to be provided or timings, do not conflict and, if they do, to provide that any special terms agreed (which should be clearly set out on the order form/invoice) will override the relevant standard term.
Indemnities (a promise to pay a particular amount should a particular liability arise) are a serious contractual protection which should never be entered into without proper thought.
You should usually resist granting indemnities, but try to include them in your Ts&Cs to protect you if there is a particular issue of risk. If you have to give an indemnity, try to cap the level of liability or limit the particular circumstances and time periods in which it applies so that any potential liability is clear and limited.
Right of termination
Thought should be given to how a business can end a contract if the relationship with the other side breaks down or you simply no longer wish to do business with them. This point can be covered by a termination clause setting out the circumstances which would allow this to happen.