Start-Ups: Our Top Tips on Terms & Conditions
For businesses just starting out, there is an extensive list of tasks to carry out.
Sorting out your terms and conditions of the business is not usually a priority. Instead, getting your product ready for launch, targeting customers and marketing your product can often take precedence. However, neglecting your terms and conditions in your start-up process could ultimately impact the cash flow of your business through delayed payments and leave you exposed to unnecessary liabilities, and in turn, greatly affect your chances of growth and success.
Without terms and conditions you put yourself at risk of uncertainty and misunderstanding. It is important to establish the terms and conditions between the parties upon which you are providing your services to your customers. Set out below, are some of the reasons why you should go to the effort and expense of ensuring you have suitable terms and conditions in place.
Why do you need terms and conditions?
- Certainty – terms and conditions set out the position in writing as to what you have agreed to provide to your customer and the basis upon which you will provide it. For instance, starting with a clear definition of what products or services will be provided will hopefully avoid any uncertainty down the line.
- Enforce your agreement – with clear terms and conditions, it will be evident when a customer has breached the contract. For example, setting out when payment is due makes it much easier to enforce the contract and take action against non-payment, should you need to do so.
- Limit liability – Your terms and conditions should adequately protect you by limiting your liability to your customer. For example, disclaiming liability for failure to deliver or a delay caused by an event outside of either party’s control such a natural disaster.
- Termination – terms and conditions should set out the duration of your agreement with the customer, how much notice must be given to terminate the agreement and the terms for earlier termination (i.e. breach of agreement, non-payment and insolvency).
- Excellent customer service – a clear set of terms and conditions that are consistently applied to all customers will manage the customer’s expectations and assist you with providing an excellent customer service. They will clearly define each party’s obligations and responsibilities and set out terms in respect of complaints, refunds and insurance.
- Comply with the law – There are certain regulations that apply where you are selling to consumers or a business. For example, well drafted terms and conditions will incorporate the necessary requirements and ensure that you are compliant with current legislation (i.e. cooling off periods when selling to consumers).
- Puts you in a stronger position – having your own written terms and conditions specifically tailored to your business means that you can trade on your terms and not somebody else’s which may be less favourable to you. It will also aid you in showing your business is professional and give it credibility that it has its own terms and conditions in place.
- Retaining title – having terms and conditions in place to identify who owns unpaid goods and when the title of goods passes is crucial. A well thought out set of terms and conditions will ensure you are able to prove ownership and rights to any unpaid goods if the customer were to go into liquidation/administration.
- Identify jurisdiction – Your terms and conditions will identify which law shall govern the contract and in which courts any such legal action will take place. This is important to those that trade outside of England and Wales.
- Minimise legal disputes – having clear written terms and conditions covering all important points concerning the provision of goods or services will reduce the likelihood of being taken to court over a legal dispute.
When having terms and conditions drafted you should also consider:
- Tailored approach – the terms and conditions must be compatible with how you do business and should be reviewed on a regular basis and updated if you change your procedures. You should not need to adopt the way your work to fit a template.
- Incorporating your terms and conditions – your terms and conditions need to form part of your contract. The best terms and conditions will be no good at all unless they are clearly presented to the customer before the contract is formed and not challenged or varied by the customer. This will mean that as well as the terms and conditions you will need processes and training in place to ensure they are incorporated correctly as part of your sales process.
- Battle of the forms – Be alert and ensure that when you do supply terms and conditions that they are not superseded by a set of terms and conditions you have received in response. As a general rule, the last in time before the contract is formed prevails.
The cost associated with drawing up standard terms and conditions is often a deterrent to many businesses.
However, when compared to the cost and risk of litigation, misunderstanding and difficulty in getting paid, having terms and conditions put in place is an inexpensive exercise.
In fact, having terms and conditions in place can put a business in an advantageous position in relation to important commercial issues such as delivery and payment terms, risk and title, and the consequences of a breach.
Should you wish to find out more about drafting terms and conditions for your business, please get in touch with one of our experts: Paul Mitchell (Cambridge), Mark Watson (Norwich) or Geoff Hazlewood (Bury St Edmunds and Ipswich), who will be keen to assist you. Alternatively, please complete one of our online enquiry forms.
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