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Business legal MOT – Chapter 2 – Terms and conditions

Images by Gareth Jones

If you are a business owner who is able to work from home during the present crisis, perhaps with fewer distractions, this might be an ideal time to reflect on your business and how it could be improved to emerge from the crisis in a stronger state.

In a series of short blogs, Morecrofts partner Donal Bannon will touch upon the various aspects of any business that may require attention in order to reduce risk and strengthen a business going forward.

Chapter 2 – Terms & Conditions

Following on from my first article dealing with the structure of your business the next blog in this series concerns your terms of business.

How many of you have terms of business? Do you ensure they are incorporated into all contracts with your customers? How do you exclude and restrict liability? If supplying goods have you reserved title? Do your terms make special provision for contracts involving consumers?

A good set of terms of business will deal with important issues such as:

  1. If you are a supplier of goods, when ownership of the goods passes (hopefully this should state only when payment has been made) and when risk of loss or damage to goods is assumed by the customer (hopefully this should state when the contract is formed);
  2. How payment is to be made and when, including making time to be of the essence for receiving payment and providing for interest to be paid for late payment;
  3. Your obligations and your customer’s obligations (and setting out the scope of works and excluding areas of work not covered);
  4. What amounts to a breach of the agreement and what remedies are available for the party adversely affected by the other’s breach, including the right to end the agreement; and
  5. Whether liability for breach of the contract is to be capped or limited in some other way.

Even if a business has a watertight terms of business they are useless unless the customer or other contracting party has agreed to them being the only terms of the contract between them. This is known as Incorporation. Online purchases can be made using links to the set of terms and tick boxes to confirm that the customer has read and agreed to such terms. Otherwise it is best practice to get the customer to sign your business terms as evidence of their acceptance of them before any goods or services are supplied.

If you are a supplier of goods do your terms allow you to reserve title to them until you have received payment for all goods supplied by you? Do they allow you to attend your customer’s premises to recover unpaid goods?

If you have any questions which arise from reading this blog then get in touch with me at djb@morecrofts.co.uk

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