Dear Reader,

The success of any business will always be defined by sales, so naturally this is the area where effort will be focused in most organisations most of the time. Just as important as generating income however, is ensuring that your business is adequately protected by terms and conditions.

This is an area that can sometimes be over-looked; without well-drafted Terms and Conditions your business may be at risk. Take the time to get them right and control any costly exposure in your arrangements with your customers.

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Best wishes,

James Hunt and the team at Everyman

Is your business properly protected by your terms and conditions?

What are the risks?

The key risks will depend on the nature of your business. Here are some that you should consider:

Limitation of Liability

The most important provisions will generally relate to your liability to compensate your customer if something goes wrong. Subject to regulation, contracting parties have freedom to restrict or exclude their civil liability, but excessive limitations may deter customers from using your company, so a balance needs to be struck.

Passing of Title

If you supply goods on credit, it may be useful to reserve ownership in the goods to your company until the purchase price has been paid. Should the buyer become insolvent, you may have no prospect of receiving payment, but if the goods can be recovered, they might be resold to another buyer.

Intellectual Property and Data Protection

These are increasingly important as businesses go on-line. You may need to consider who will own the copyright in documents, designs or software which you produce and what uses you expect to make of the databases created during the course of your business.

Common mistakes and how to avoid them

Structure

A properly prepared agreement can sometimes be quite complicated. New technology means it is increasingly common for businesses to supply a bundle of products and services and you may need different contractual terms for each area. Failing to adopt the appropriate structure can lead to your business being exposed to risks.

If you are trading on the internet, you will need two or three documents: (1) terms and conditions of use – applicable to all visitors to the website; (2) terms and conditions of purchase of products or services; and (3) a privacy policy (covering data protection issues).

Formation of the contract

As well as the structure of the document, take the time to consider your contracting procedure. Beware of sending your terms and conditions to the customer after an order has been made (e.g. on the back of an invoice), as they will not have been validly incorporated into the contract. Ideally, as part of your customer credit procedures ask them to agree in writing to be bound by your terms and conditions.

Alternative dispute resolution clauses

Be cautious about including clauses which require disputes to be referred to mediation or arbitration. This will rarely be appropriate for a supplier, unless there is a particular need to preserve privacy. Why preclude yourself from bringing legal proceedings for non-payment?

If you'd like further information, please contact us by ‘phone on 0845 868 0962, or by email: james.hunt@everymanlegal.com. We'll be very happy to set you on the right path.

Legal updates and news:

To find out more about making sure you get your terms and conditions right, come along to our workshop on Wednesday 15th September 2010, click here to book.