There are key facts regarding terms and conditions that every business owner should be aware of.
Terms and conditions are, in essence, the terms of contract between a business and the customer.
For a business, they are designed to protect its rights, limit liabilities and provide some peace of mind that you will receive payment when selling goods or providing services.
For customers, they also provide protection if a business fails to live up to its promises.
The commercial lawyers at Tallents Solicitors say: “Never underestimate the importance of getting the wording of your terms and conditions right. It’s not enough to simply copy them from a similar business, or get them from the internet. They form a legal contract with your customers, so you should always consult a solicitor when drawing them up.”
At their most basic, terms and conditions should cover:
- Terms of delivery
- When the legal ownership for any goods passes from the business to the customer
- Delivery arrangements
- Payment terms – in advance, or in arrears? Is there a discount for paying early or the possibility of paying by instalments?
- Credit limits and credit periods – if you don’t set any, then the law defaults to 30 days
- Your right to charge interest on late payments and claim compensation for any debt recovery costs
- Termination rights (for both the business and the customer)
- Your commitment to quality
- The Data Protection Act and what you will do with your customer’s data.
“It’s also very important to understand ‘when’ you should make customers aware of your terms and conditions so that they are legally binding and enforceable. It’s not sufficient just to print them on the back of your invoices, sit back and hope for the best.
“Customers should be made aware of, and agree to, your terms and conditions long before the invoice is sent to them. We recommend that terms and conditions should be explained, or made available, to customers at the very start of your relationship with them, for example on your estimate or quotation for work, or on your website.
“At the very least, they should be given to the customer when they place an order with you. This gives the customer the opportunity to consider and raise any issues before proceeding with the order.
“Businesses that trade online also need to be aware of the Distance Selling Regulations (DSR) and ensure their terms and conditions encompass these consumer rights. Online consumers actually have more rights than if they shop on the high street, so all businesses should ensure they are fully compliant with DSR if they wish to enforce their terms and conditions.”
The DSR means that, unless explicitly told otherwise by the business in their terms and conditions, online consumers can:
- Tell a shop they’d like to cancel their order anytime from placing it, up to seven working days from the day after they receive it.
- They can expect a refund of the original postage charge if they cancel within this time.
- They can expect a free returns service.
In the event of a dispute, the enforceability of terms and conditions is greatly weakened if they have not been incorporated into an agreement before it is completed.
“Terms and conditions that have just been sent out with a delivery note or invoice do not afford the customer the opportunity to raise any issues before you make a request for payment. In dispute situations, terms and conditions that have been issued in this way may not form a legally binding contract between you and the customer as the contract has already been entered into and obligations will have, most likely, been completed, whether satisfactory to both parties or not.
“For peace of mind, at Tallents Solicitors we recommend that business owners review their terms and conditions regularly, and always consult a solicitor when drawing them up. Not to do so could leave a business out of time and out of pocket for something that could have been sorted quickly and easily.”