Every business relies on the value of its relationships and contracts with customers, but what happens if something goes wrong? If you don’t have robust terms and conditions drafted to protect your business’ position, then the consequences can be severe.
Set out below are some common questions on terms and conditions which BHW Solicitors in Leicester are often asked. For advice on your terms and conditions, please contact Ed Nurse on 0116 289 7000 or by email at ed@bhwsolicitors.com.
Why do I need terms and conditions?
If you don’t have your own terms and conditions then every sale you make will be subject to the (not generally helpful) statutory legal position, or even worse, subject to your customer’s terms and conditions (which will be drafted to help them, not you).
As well as improving your position legally, having written terms and conditions clearly setting out the terms on which you conduct business helps with certainty over what has been agreed. This is beneficial for you and your customer. You know what you have agreed to do and the customer knows what to expect from you. It also helps to minimise the chance of any disputes arising in the future because well drafted terms and conditions will often be clear about what you are and aren’t responsible for.
“My only regret is that we didn’t introduce these terms and conditions sooner. This was one of the better business decisions we ever made and the cost of the work has been recovered many times over. Being able to enforce against liquidators in uncertain trading times has been one of the greatest advantages.”
Robert Flowers, Managing Director of Ramon Hygiene Products.
I supply services rather than goods – do I still need terms and conditions?
Yes. The supply of services is of course different to the supply of goods and there are different duties to be aware of (such as the duty to use reasonable care and skill) and different concerns to cover. But you should still have a set of terms and conditions to protect your position.
Can I limit my liability?
If you don’t have terms and conditions you could be liable for unlimited losses if you’re in breach of contract or negligent. We can however include provisions in your terms and conditions to reduce the scope and level of your liability under your contracts. We can exclude loss of profits and consequential losses and investigate a range of other limitations such as limiting your maximum exposure to the price of the goods or services. However, you cannot limit liability for death or personal injury caused by negligence.
When dealing with other businesses, you can also exclude some of the statutory provisions relating to quality of goods and replace them with your own warranty.
There are different rules if you are dealing with consumers rather than other businesses. Consumers are given certain rights when dealing with businesses and these are discussed below.
I sell to consumers – how is this different?
The legal position when selling to another business is completely different to when selling to consumers. Consumers are deemed to require extra protection under the law and so any business selling to consumers must be aware of its additional obligations. For example, when drafting consumer terms and conditions, you must ensure they are easily understandable and don’t hide any unexpected terms in the small print!
You cannot generally exclude statutory terms (e.g. that goods must be of satisfactory quality and fitness for purpose) when dealing with consumers and it’s very difficult to limit your liability for breach of contract.
In addition, there are certain regulations which enhance the rights of consumers when buying online (such as the Distance Selling Regulations and the E-commerce Regulations).
We can advise on everything that you must consider when dealing with consumers.
What happens if I deliver late?
Strictly speaking, late delivery is a breach of contract. However, your terms and conditions can be drafted to provide some protection so that, within reason, you won’t be liable if you do deliver late. You can also ensure that your business customers cover your additional costs if they won’t accept delivery on the agreed date.
What happens if I deliver the wrong amount of goods?
Again, this is strictly speaking a breach of contract but if the quantity of goods you’ve delivered isn’t unreasonably far off the contract quantity, your terms and conditions can ensure that your customer’s only remedy is to pay a different price, rather than cancelling the order.
What if my goods are rejected?
Any properly drafted terms and conditions will detail the exact circumstances in which your goods can be rejected. For example, they could provide for the rejection of goods only where they are defective and where notice is provided within 7 days of delivery and provided the goods have been properly kept since delivery. This doesn’t however apply to consumers who benefit from extra protection.
What if my customers don’t pay?
If you have concerns over payment by customers then there are a number of ways your terms and conditions can protect you. If you don’t offer credit then you can obviously simply refuse to deliver. However, if you have given credit, you can reserve the right to put the customer on stop, cancel orders and recover any losses you suffer.
You can also prevent title to the goods from passing to the buyer until payment has been received in full. This means that although the goods have been delivered, they will (subject to a few limited exceptions) still belong to you.
What if my customer becomes insolvent before paying?
With a properly drafted set of terms and conditions you will have the right to recover the goods from the buyer’s premises.
How do I ensure my terms and conditions are incorporated?
It is important to get into the habit of sending out your terms and conditions to all of your customers. We can give detailed advice on incorporation, but in general you should ensure your terms and conditions always accompany all quotations and other acknowledgments.
Do I need different terms and conditions for export?
No. You can incorporate the necessary export terms into your normal terms and conditions. The same principles apply for exporting goods out of the UK but there are some differences you’ll need to deal with depending on the exact nature of your business. You should always ensure that the governing law is English law and that English courts have jurisdiction to avoid any disputes being raised abroad. You should also consider international arbitration provisions.
How will my customers react to terms and conditions?
Our clients are often concerned about their customers’ reaction to the introduction of new terms and conditions. However, customers are rarely as concerned as you might think and sometimes even welcome the clarity and professionalism of well drafted terms and conditions.
“This was our greatest concern actually. Our customers are our number one priority and we were really concerned about any potential backlash from introducing new terms and conditions. However no-one said anything and we didn’t receive a single complaint. We followed BHW Solicitors’ advice on incorporating our terms and conditions and everything worked out really well.”
Robert Flowers, Managing Director of Ramon Hygiene Products.