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Why do we need terms and conditions?

Right from the start, every business should have clear, documented terms and conditions in place that set out the basis on which it sells its goods and services.

No business wants or expects disputes to happen with its customers. We all know, however, that disputes will happen from time to time. Often a dispute will arise because the customer simply was not aware of what the business was prepared to do for the price being charged. Incorrect assumptions or expectations can occur on either side, leading to a potential dispute.

Having robust terms and conditions in place - that reflect how the business operates in practice - will help prevent such problems arising in the first place, thereby helping to avoid any disputes; or, if a dispute does arise, the business will be in a much better position to deal with it.

Terms and conditions of business, therefore, are a vitally important risk management tool; similar in this respect to an insurance policy. Yet, as a one-off cost, they amount to a fraction of the overall total cost of years of insurance cover.

Commonly asked terms and conditions questions

Here are some of the most common questions our terms and conditions lawyers get asked, along with our answers:

“Why bother with terms and conditions? No-one reads the small print”.

If there is a dispute, then everyone involved will be reading them. A judge certainly will! And if things get to that point then you really WILL need your terms and conditions to have been done properly.

“Our customers never sign them anyway”.

This doesn’t necessarily matter. If you structure your contracting process in the right way, they don’t have to.

“Our customers always send a Purchase Order with their own terms and conditions attached”.

Again, if you structure your contracting process in the right way, your terms and conditions can still apply to govern the contract, rather than your customer's.

“Our customers never read them”.

This doesn’t matter. They can still be bound by them.

“Our customers are all good people, we never fall out with them”.

Nearly every business ends up falling out with an awkward customer at some point or other. It is exactly this scenario that your terms should be protecting you against.

“We deal openly and honestly with our customers and do not want to rely on the ‘small print”.

What could be more open and honest than setting out in writing precisely what the customer can expect from you, and vice versa?

“We’ve traded for years without ever having to rely on terms and conditions”.

There is always a first time. Don’t wait until you are being sued, or until you realise you will not get paid for your work, before sorting out your terms and conditions of business.

“We have insurance”.

Insurance is only likely to cover a fraction of your potential liabilities; and it may not even be valid without a robust set of terms and conditions to support it.

What should terms and conditions include?

This will depend on various factors including: what the business sells (goods, services or both); who it sells to (other businesses, consumers or both); how it sells (online, offline, on the doorstep, wholesale, retail, etc); and whether the business operates in a regulated sector (for example, estate agents or financial services). Well-drafted terms and conditions, however, will usually cover the following at least:

  1. The subject matter of the contract, and when the contract is actually formed
  2. The price, payment terms and remedies for non-payment
  3. Provisions relating to delivery and the transfer of risk
  4. Provisions relating to ownership (title) of the products, and retention-of-title clauses (allowing a seller to take back goods in the event of a buyer’s failure to pay)
  5. Limitation of the seller’s liability
  6. Termination provisions
  7. Confidentiality
  8. Data protection and privacy
  9. Intellectual Property
  10. Governing law and dispute resolution

Ensuring terms and condition are enforceable

In order to rely on your terms and conditions in the event of a dispute, it is vital that they have been properly “incorporated” into the contract. This means that your customer must have had the opportunity to view them (and, in principle, accept them) before any contract is formed. Printing terms and conditions on the back of an invoice and sending them after the goods/services have been supplied (and therefore after the contract has been formed) will be far too late for those terms be incorporated into the contract - and the protection that your terms and conditions were designed to provide for you will be lost.

At LCF Law we can offer fixed fees to draft (or amend existing) terms and conditions; and, additionally, our solicitors also provide detailed advice on how to ensure your terms are properly incorporated into your contracts so that you are as fully protected as possible when dealing with your customers.

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