The importance of T&Cs for your business

Carefully written terms and conditions are important for businesses of all shapes and sizes – but are often overlooked, writes Daniel Whitehouse, Solicitor at ORJ.

Unfortunately, many businesses tend to not think about their T&Cs until something goes wrong – by which time it’s usually too late.

Solid, legally-sound terms and conditions are particularly important in business-to-business contracts. Unlike transactions made by an individual customer, B2B contracts are not covered by the Consumer Rights Act and, therefore, are not so well protected.

T&Cs form an important part of many business transactions, providing a legal framework for the relationship and reducing the risk of disputes between the parties. They should include how and when goods or services are to be delivered, to what standard and what happens should a transaction go wrong.

Having T&Cs in place makes it easier to deal with late payments, supply issues or cancelling contracts when a breach occurs.

Whether your business is buying or selling, here are some of the main considerations when it comes to T&Cs.

Auto-renewal clauses

One common area where T&Cs can help is with auto-renewal clauses. Some contracts include terms whereby the agreement refreshes and reloads after a prescribed period of time – often five years and usually with a six-month notice period.

There is no automatic obligation for a supplier to give a reminder towards the end of the contract, so often the auto-renewal date arrives unnoticed and customers find themselves tied into an agreement for a long period. This could be for a simple service, such as photocopiers and printers, or something more expensive.

A clause can be included in T&Cs which expressly states a reminder must be issued six months prior to the end of the contract.

Limitation of liabilities

Without clearly drafted T&Cs, a business could be liable for unlimited damages if something goes wrong and there are direct or indirect losses. Carefully written clauses can cap the amount payable in most circumstances.

Of course, a supplier’s liability can only be restricted as much as is permissible by English law. If a limitation of liability is deemed unreasonable, it will be unenforceable. Expert lawyers can help you strike the right balance.

Wording in T&Cs is important to protect businesses. For example, promising ‘reasonable endeavours’ rather than ‘best endeavours’ can be safer and less likely to land a business in hot water when disputes occur.

Retention of title clauses

The aim of a retention of title clause is to allow the unpaid seller to reclaim possession of the goods. 

Generally, this will take the form of a clause within a business’ T&Cs which says the goods belong to the seller until it has received full payment.

This includes a right for the seller to repossess the goods if payment doesn’t materialise, as well as the right to enter the buyer’s premises.

Retention of title clauses are not possible when goods are fixed to the ground or have been mixed with other goods. For example, a seller cannot retain ownership of bricks that are being used to build a wall.

Payment terms

Terms and conditions should clearly state the payment terms. For example, a business can demand payment within 30 days of an invoice. If the payment hasn’t been received within the defined timeframe, action can be taken.

Including payment terms in your T&Cs will protect your business and help avoid disputes that could arise from a lack of clarity.

Other considerations

Other aspects to consider include termination provisions, intellectual property rights protection and data protection.

It’s vital that your terms and conditions are bespoke to your business – avoid the temptation to copy and paste from a similar organisation.

Also, terms and conditions need not be the length of a short novel and dogged by legal jargon.

At ORJ, we have the knowledge and expertise to help you draft T&Cs that are clear, effective and, most importantly, enforceable.

Get in touch today by emailing team@orj.co.uk or calling 01785 223440.