June 2007

Terms and Conditions of Business

Terms and Conditions of Business (“Ts & Cs”) are an extremely important aspect for the carrying on of any form of business. Not only do they set out in clear terms how a business operates and what goods and services are provided, they are also a method of protecting the business and can, for example, be used to exclude or limit liability.

Ts & Cs can avoid lengthy and expensive disputes arising between, for example, the business and its customers and/or suppliers, because (as stated above) they set out the basis upon which the business is carried on. They can detail and cover areas including how the price of the goods and/or services are determined; the time for payment of any invoices raised; what goods and/or services are being provided; liability of the parties; dispute resolution procedures; and termination provisions. Obviously the Ts & Cs can be tailored to suit the requirements of the particular business in question and may cover additional areas such as confidential information or intellectual property rights which may need to be protected. Of course, any other areas of relevance may also be incorporated.

It is important to note that your Ts & Cs need to be brought to the attention of your customers and suppliers before any contract or agreement is entered into otherwise they may not be deemed to govern the relationship between you. If that is the case, the provisions governing that relationship are unlikely to be adequate. Further, if your Ts & Cs do not apply to the relationship, it may be that those of your customers or suppliers do. This will, of course, be detrimental to your business as, for example, it may mean that customers have a longer period to settle your invoices.

There are potentially great risks involved if Ts & Cs are not in place or are not sufficient to meet the needs of the business and our next article will explain the implications of getting things wrong.

It is a false economy for a business to go without Ts & Cs. It is also a false economy if they are drafted without seeking appropriate advice.

Baily Gibson can assist with the drafting and preparation of Ts & Cs and accordingly, should you require any further or additional information, please contact our offices.