Terms of business refer to the provisions of the legal contract between you and your customer for the supply of products or services that govern your commercial relationship. They are the terms upon which you agree to conduct business with another party and the agreement is the document outlining these points. They can be referred to by a variety of different names, including business terms, terms of sale, terms of service, or Terms &Conditions (T&Cs). All of these versions make the implicit assumption that you are selling your goods or offering your service on a non-negotiable basis.
In this article, terms of business agreement, we take a look at these issues in more depth.
Please click here to find out more about our corporate services
Free Initial Telephone Discussion
For a free initial discussion with a member of our New Enquiries Team, get in touch with us today. We are experienced in dealing with all the legal aspects of terms of business agreements, and once instructed, we will review your situation and discuss the options open to you in a clear and approachable manner. Early expert legal assistance can help ensure you are on the best possible footing from the start and also avoid the stress of dealing with these issues on your own. Simply call us on 0345 901 0445 or click here to make a free enquiry and a member of the team will get back to you.
Why are terms of business important?
Business terms are critical for various reasons:
They provide both parties with comfort. Having your business terms and conditions in writing promotes certainty between the parties. When a deal of any kind is negotiated, various possibilities and alternatives are typically discussed and evaluated, frequently over the phone or in person. This can result in disagreement or uncertainty regarding what was finally agreed upon, especially if the matter is not brought up again for an extended length of time. This problem can be resolved by explicitly stating the agreed period in the conditions of business. Similarly, having explicit conditions of business decreases the possibility that courts will imply clauses into the contract. This not only creates ambiguity between the parties, but the implied statement may work against you.
Liability Limitation. Generally, commercial terms contain limitations on the liability of the service provider or seller of goods, such as when the service falls short of specified standards or the goods are defective. This can help safeguard your firm against third-party lawsuits.
Savings on costs. In the long run, settling on business terms at the start of a new client relationship can result in cost savings. When parties are anxious to resolve their differences, topics are more likely to be discussed gently and rationally. Resolving an issue later, when the parties’ relationship may have soured, is far more difficult and costly.
Enhanced efficiency. Although it varies by business and customer type, implementing standardised terms of business or a specific type of contract can increase workplace productivity. Employees that interact with clients and the order process are less likely to make errors or become confused about which terms apply, and younger staff may be swiftly trained if your terms of business apply uniformly.
Assures that your terms are widely used. By preparing your own terms of business, you reduce your reliance on your customers’ terms of business, which are unlikely to provide your firm with the protections it requires. It is critical for both parties to understand which commercial terms apply.
Reduce the likelihood of a disagreement or litigation. By establishing your and your customer’s contractual obligations fully in writing, you can ensure that both parties are aware of what has to be done to fulfil the contract and when. This can aid in the avoidance of future confrontations. Having the terms in writing can be useful if you are subsequently required to provide documentation of the terms agreed upon.
Credibility. Possessing well-drafted, legally enforceable conditions of business demonstrates to customers that your organisation is a competent and dependable one. The majority of individuals would shun or at the very least carefully reconsider any arrangement with a business that appears to be haphazard and disorganised. Having official documentation and paperwork in place can significantly improve your business’s reputation.
What should your terms of business agreement include?
The terms of business section should include the major terms and conditions that govern your business’s operation. While business terms should be comprehensive and provide critical protections for your organisation, bear in mind that aggressive, unnecessarily lengthy, or tough restrictions may deter customers from cooperating with you.
When creating your terms of business, keep in mind that less common or sector-specific issues may be relevant as well. Additionally, ensuring that your rules of operation are legally enforceable is not always straightforward. Obtaining legal assistance can ensure that all of these concerns are addressed and can help alleviate any concerns you may have.
The following items should be included in your terms of business: a description of the goods or services, delivery and payment conditions, title and risk, contract term and notice, payment security, assignment, confidentiality agreements, and restrictive covenants.
Whose terms of business should be used?
This is often referred to as the “battle of the forms” and there are no hard and fast rules for ensuring that your business terms are incorporated into the contract, but there are some things you can do to increase the likelihood.
- Ensure that you expressly and unequivocally reject the other party’s business conditions in favour of your own.
- Consistently refer to the applicability of your terms of business on papers and documentation and offer copies of your terms of business to the other party as early in the negotiation process as possible, as well as during the order and delivery process. Include them with order acknowledgements, delivery slips, and bills, for example.
- If any of your business terms are unusual for your industry or are exceptionally onerous, make this clear to the opposing party.
Is it better to create bespoke terms of business or use standardised?
Whichever terms of business you choose will depend on your firm, your clients, and the kind of contracts and projects you enter into. Standardised terms of business can improve workplace efficiency and are a less expensive choice because once established, they can remain in place unless amended by legislation or as a result of a change to your business procedures.
Standardised terms of business can also be updated as necessary for specific customers or projects by establishing an overriding agreement that states that your terms of business apply subject to any changes made in the other agreement. For instance, if you have agreed with a particular customer that they can have 28 days to pay any invoice, but your terms of business state that they must pay within 21 days, a separate agreement can be entered into with that customer stating that they must pay within 28 days regardless of the terms of business.
Customized terms of business may be advantageous if you have a very major or large client with strong bargaining power who refuses to accept your normal terms, or if you often supply different services or items to your clients on different conditions. Standardised terms of business may be impractical in this situation.
A critical element to remember is that your terms of business must function effectively and legally for your firm; if they do not, you should reconsider, and seek advice from an experienced corporate solicitor.
Are terms of business legally enforceable?
While business terms can help protect your business, they are not inherently legally enforceable. Due to the fact that they are not signed and recognised in the same way that traditional contracts are, their enforceability is frequently questioned.
To be legally binding, business terms must have been agreed by customers or clients. If a consumer or client was not required to accept your business’s terms prior to engaging your services, they are not obligated to do so.
It is critical that your terms are properly presented so that no argument can be made that the user was unaware of them prior. For instance, if your business’s terms are hidden away on a difficult-to-navigate webpage, users will not be expected to find them on their own.
Additionally, the content must be worded clearly and concisely, avoiding technical jargon and acronyms that your clients may not comprehend. Any content that is regarded to be excessively technical will have a detrimental effect on its enforceability.
A critical element to remember is that your terms of business must function effectively and legally for your business and as such, legal guidance is advisable.
How we can help
We have a proven track-record of helping clients with their terms of business agreements. We will guide you through the process and ensure all checks are carried out swiftly and efficiently and we firmly believe that with the right solicitors by your side, the entire process will seem more manageable and far less daunting.
How to Contact our Corporate Solicitors
It is important for you to be well informed about the issues and obstacles you are facing. However, expert legal support is crucial in terms of saving you money and ensuring you achieve a positive outcome.
To speak to a member of our new enquiries team today, simply call us on 0345 901 0445 or click here to make a free enquiry . We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.
Deciding when (or whether
Disclaimer: This article provides general information only and does not constitute legal advice on any individual circumstances.
Comments are closed.
