Terms of Business
Typically we advise business clients on drafting/varying their standard terms of business i.e. the terms on which they contract with their customers/clients to provide goods and/or services.
A client’s standard terms and conditions of business/trading can obviously differ depending on whether the business in question is selling goods or services (or both), and between different business sectors, but there do tend to be key areas which need to be covered, including:
• Priority of Terms: the business needs to establish that its terms of trading apply, to the exclusion of the customer’s/client’s own terms (which may appear, for example, on a purchase order or order confirmation);
• Delivery: when and where are the relevant goods/services to be delivered and are they to be delivered all at once or in instalments/tranches? What if they are delivered late - does the customer/client have the right to cancel the order/project in that (or any other) case?
• Risk/Title/Ownership: when does a customer/client become responsible for (and so become liable to insure) goods, and when does it actually own the goods outright? Is this on delivery or when payment is made? Can you, as the supplier, retain title to the relevant goods after they have been delivered (and until you have been paid) and, if so, on what terms?
• Payment Terms: your terms of business need to stipulate when and how you will invoice your clients/customers, how long they will have to pay your invoices, whether you can charge interest on overdue invoices and what other remedies you have for non-payment.
• Limitation of Liability: your terms of business also need to expressly limit your liability to your customers/clients if, for example, you provide them with faulty goods and/or deficient services. Such provisions will usually only be effective if they are reasonable, so it is important that such provisions are drafted (or at least reviewed) by us.
Often the challenge is to cover all the key areas without making your standard terms of business too long or unwieldy (which can put off prospective clients/customers). We will help you with this.
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