Trading terms and conditions
Why does a business need terms and conditions and trading?
It is a good idea to have separate terms and conditions of trading – one set for your customers and one set for your suppliers. Drafting your own terms and conditions will allow you to limit your liability, state your position on refunds and quality control and manage when ownership of your goods passes to the seller. With a retention of title clause, for example, you can retain title of goods you sell until you receive payment. Ordinary principles of contract law states that ownership passes at the point of sale or when the goods are delivered.
You should also bear in mind that you cannot opt out of certain statutory standards. For example, the Sale of Goods Act states that good supplied must be “of satisfactory quality” and you cannot use any terms which contradict this standard.
Drafting terms and conditions of trading
It is absolutely vital that you properly draft terms and conditions of trading so you properly protect your business and minimise the risk of costly and stressful disputes with suppliers or customers. This is particularly true when dealing with consumers as consumers are generally afforded a greater deal of protection than businesses in business to business sales.
What to include in your business terms and conditions
- Date of agreement
- Which periods the agreement would apply
- The names of the two parties
- Payment terms
- Timing – who will deliver what and when and is time of the essence
- Schedules listing specific matters where relevant
- Statement that the contract will proceed on the terms agreed and a signature indicating their understanding.
How to draft terms and conditions
The most basic elements are an offer which is accepted by another and for both to have an intention to be legally bound which is normally indicated by a signature on a written contract.
Be aware of certain elements:
- There should be a date specifying when the offer will expire.
- Ability to cancel the contract. A clause should specify which party can cancel the contract and on what terms. Care must be taken to restrict the scope of this clause to ensure the promises of each party are definable and not too wide. If they are considered too wide the contract will be rendered void and therefore unenforceable by law.
- Variation. If one party agrees outside the terms of the contract to do something more than what was initially agreed, the contract will only be enforceable if the other party provides something more to make the contract proportionate.
- Waiver. A doctrine of waiver means that a contract is no longer enforceable after a specified time. Typical consumer contracts require delivery of goods within 28 days otherwise and after this time the contract will be rendered unenforceable.
- Promissory estoppel. The law here is not always predictable. This doctrine is known to overlap with the doctrine of waiver. Where the doctrine of waiver disallows, say, the recovery of a sum of money, the doctrine of estoppel steps in if the court considers this to be unfair. This allows a defence against the automatic doctrine of waiver to ensure the original terms of the contract might still be enforceable.
What is an exemption clause?
If you enter into a legally valid and binding contract, it is common to find clauses in the contract which determine the outcome of a breach of the contract by either one party or both, typically by seeking to restrict that liability. These clauses are known as exemption clauses.
If you need solicitors to draft or advise on your business terms, please do get in contact.
Haven't found what you need yet?
Why not search the whole site?