Devil’s in the detail – why having legal terms and conditions is vital for any company
For many businesses, drawing up a cast-iron set of terms and conditions might not really seem like it should be top of the priority list. If you’re just starting out you’re most likely focusing on the endless list of important tasks such as getting your product or service ready or finding customers.
However, according to our lawyer Charlotte Bontoft, having sensible terms and conditions in place to cover your trading relationship with customers before you trade is crucial to ensure you and your customers are on the same page regarding how your relationship is governed and avoid any ambiguity that would arise without them.
Here, Charlotte shares her advice for making sure you put your company on the front foot and don’t end up at the mercy of the buyer. Long-standing customer relationships are not easy to achieve, but by setting out terms and conditions at the start can help prevent issues arising in the future.
What’s the point in having ‘Ts&Cs’?
Well, ultimately, without them it’s your customer relationships that could be affected the most. Worst case scenario, you could end up losing customers, because, without set written terms that govern simple things such as how and when you are paid, when risk in the goods passes to the buyer, and each party’s obligations, there is ambiguity as to what is expected for either side.
For example you may expect an invoice to be paid 30 days after it has been issued, while your customer believes they can pay 60 days after – this delay in payment could mean your business will have to pay for materials or staff wages before you’ve received the funds you’re owed. This could be deadly for some businesses that do not have sufficient cash-flow reserves cope with situations like this.
Basically, if you don’t have Ts&Cs, you will be putting yourself in the path of numerous risks that could easily be avoided by putting all your company’s terms and conditions of trade in writing. It’s essential to agree the arrangements involved between parties in any deal – it’s about understanding your respective duties and rights. Having well-composed terms will protect you and help make sure those you are trading with don’t have room to backtrack.
Charlotte said: “Without explicit terms, your clients might believe they are not expected to pay until the job is completed, whereas you might wish to be paid in stages. And you won’t be able to charge interest for late payments unless this is stipulated in your Ts&Cs.
“So, get your terms right and your customers should have no excuse for not paying you on time, every time, regardless of whether you are a big or small business. It will also save you time and money by spelling out important details from the start, which is helpful if you do encounter disputes at a later date.”
If you don’t have Ts&Cs but your customer does, then you will be bound by their terms, and that’s a position no business owner wants to find themselves in.
What to put in your Ts&Cs
Terms and conditions need to cover a number of situations and be very clear about each party’s role and responsibilities. They are particularly important when things go wrong and there is a breakdown in a commercial relationship.
“Here at James Legal we always give individual, tailored advice to businesses on what they ought to include in their Ts&Cs. I wouldn’t recommend downloading a one-size-fits-all form from the internet, as these often don’t contain details of how the contract has been formed for that company or consider liability or payment terms,” explained Charlotte.
“They also might not stand up in a dispute, so it could end up costing you tens of thousands of pounds. Nor is it a good idea to copy Ts&Cs from another business as their needs might be very different to yours.”
She added: “It’s definitely worth investing in detailed legal advice at the start and having a really watertight set of terms that you can rely on, this could save you a lot of time, money and stress in the long run.”
The devil’s in the detail
Charlotte said: “There is an incredible amount of detail that you need to consider, including your invoicing processes – for example, do you require your customer to raise a purchase order? It might seem a bit tiresome having to go through endless scenarios but we can support you with this and make sure all the essential content is captured.”
Terms and conditions can apply to goods or services and, if your business provides both, they can be featured separately or combined.
“Ts&Cs are essential for a business of any size, whether you deal direct with consumers or you are a business-to-business trader, and whether you supply goods or services,” said Charlotte. “Also, it’s important to use language that people will easily understand, there’s no point in including confusing jargon that a customer could claim wasn’t comprehensible.”
A final word of wisdom from Charlotte: “Even if you’ve been trading for some time without any issues, it’s still a good idea to invest in some Ts&Cs as you just never know when you might suddenly find you need them.”
If you’d like to talk to us about setting up terms and conditions for your business, ring (01482) 225566 or email firstname.lastname@example.org