Contracts and terms and conditions

No matter what your business is, whether you are selling goods or supplying a service, you will be dealing with other individuals and organisations.  When you agree to sell or buy something, or to provide or make use of a service, how do you know what the terms of that agreement are?  And what are your remedies if things go wrong?  

It may be that you enter into individual contracts for each transaction, and those contracts may contain all the terms and conditions which apply to the transaction.  Alternatively the other party may simply refer to separate standard terms and conditions which will apply to the transaction.  In either situation, if you are contracting on someone else’s terms, you must make sure that you see a copy of the terms and conditions and read them carefully to make sure they are acceptable to you.  It is far better to have these discussions beforehand, rather than after you have signed and committed yourself to an unfavourable deal. 

In order to be certain that you are protected, you can prepare your own terms and conditions which provide all the protection which you require and are specific to your business.  You will then know that in all of your dealings the same rules apply and you will have a satisfactory remedy if things do go wrong.  Having your own forms of contracts and terms and conditions also help to give your business a professional and established image. 

Terms and Conditions generally cover the following topics:

• Method and timescale for payment
• Delivery
• Quality
• Title and Risk
• Termination provisions
• Liability

Where both you and the party you are dealing with have your own terms and conditions, whose terms and conditions will apply to your agreement? 

In practice, the last set of terms and conditions referred to before the contract is accepted or performed (i.e. the goods provided or services supplied) will prevail.  This was shown in a case where a delivery of whisky was made to the buyer’s premises.  The seller attempted to impose their own terms and conditions by handing a delivery note to the buyer which contained the seller’s terms and conditions.  However, the buyer did not sign the delivery note and instead stamped it “Received on [the buyer’s] conditions”.  The matter went to court and it was decided that it was the buyer’s conditions which prevailed. 

So, to ensure that your terms and conditions apply, you must be sure that yours are the last that are referred to (for example with the acceptance of a purchase order).  Alternatively, if the other party is someone you are hoping to deal with regularly and is a good source of business for you, you could negotiate with them over any differences in your respective standard terms, and agree a set of terms and conditions which will apply to all the transactions carried out between you which you are both happy with. 

If it is a one-off or low value deal then it may not be worth the time or cost of negotiating new conditions.

If you have a deal which is of a high value, or has the potential to expose you to a lot of risk, then your standard terms and conditions may not cover those particular circumstances and you should consider drawing up a specific contract which covers all the aspects of that individual transaction.  That contract can give you greater protection than you might ordinarily require, and can set out specific terms for delivery, performance, payment or any other issues which are key to that transaction.