Many clients come to us because there is a dispute with a third party over what they believe to be the terms of the agreement; often there are no written terms, or there are written terms but they are so poorly drafted that they are vague and do not assist. In such cases reliance is placed on statutory obligations but these are often limited.
A good set of terms of business will deal with important issues such as:
- If you are a supplier of goods, when ownership of the goods passes and when risk of loss or damage to goods is assumed by the customer;
- How payment is to be made and when, and providing for interest to be paid for late payment;
- Your obligations and your customer’s obligations (and setting out the scope of works and excluding areas of work not covered);
- 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
- Whether liability for breach of the contract is to be capped or limited in some other way.
Even if a business has a good set of terms, they are useless unless the customer 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 keep ownership of the goods 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