Which Contractual Terms and Conditions are essential to protect my business?

Terms and Conditions

What is meant by Terms and Conditions?

If you are supplying goods or services to your customers then you will be required to put in place contractual terms and conditions between yourself and your customer stating the required workings and contractual provisions of your business.

The document will not be limited to being called Terms and Conditions but can also be entitled “Terms of Sale”, “Sale Contract”, “Business Terms” and in actual fact can be termed whatever is wished by the business providing the goods or services.

As is often the case with terms and conditions they are simply provided to the customer without the opportunity for the customer to amend them. An example of this is during internet transactions whereby a customer will be unable to purchase the products unless they tick the requisite box stating that they have read and are aware of the terms and conditions. This is often seen as a take it or leave it provision.

In certain cases when providing terms and conditions of sale to clients there is the opportunity for the client or consumer to negotiate the terms. If this is the case then this may be termed a consultancy document or a document of sale and will not strictly be a set of terms and conditions.

What is the purpose of a Terms and Conditions document?

Each business providing goods and services will need to draw up a complete terms and conditions document to ensure the following:

  • To provide full details of what may have been agreed

  • To make the customer aware of all the inflexible terms under which you will accept business

  • To define the parameters of the contract

  • To define the procedures by which you will accept business

  • To fully protect your business and your rights

  • To limit your liability under the contract

  • To provide any other important provisions such as payment and cancellation procedures

Contractual Provisions

Which contractual provisions should form the basis of my terms and conditions of sale?

Definition

The product that you are selling must be clearly described within the terms and conditions document or alternatively by referencing another document  or a specific area on your website.

Often terms and conditions will need to be kept brief and in certain cases this is essential, for example when they are provided on the back of a sports ticket or a train ticket. In circumstances like this it can often be beneficial to produce two sets of terms and conditions, one long form and one short form. In this case reference to the long form must be made within the short form.

Pricing – Fixed Price, Price Increases and Changes

It is not always prudent to put the price of products into the terms and conditions document as often prices can be subject to change which will result in constant updating of the terms and conditions of sale. It is often a more preferable route to state that the price is in accordance with the website or published price lists.

In relation to services where there is continual selling of services to the same customer which may result in a price decrease for example. This and how it is calculated should be fully dealt with in the terms and conditions of sale.

Payment Provisions

A complete terms and conditions document should include fully detailed payment provisions. Often payment will be made immediately for example a one of service purchased over the internet so in this case it will need to be specified that the goods will not be released until full payment has been made.

Often there are terms and conditions between parties for an ongoing service or for a booking that has been made for a service that will be provided in the future. An example of the second category is terms and conditions for accommodation that will be provided and is booked for in advance. In this case a staggering payment schedule may need to be drawn up specifying the percentage of the total price which will need to be paid by a certain date.

Default and penalty provisions for late payment are essential for terms and conditions for this kind of services.

Insurance Policy

This may vary between business to business but it is essential to provide full details of this in your terms and conditions of sale.

Termination or Cancellation Provisions

Many contracts are terminated instantaneously when for example payment has been received in cash or where it has been made online by a credit card but in certain cases where there is an ongoing provision of services effective cancellation or termination provisions will have to be provided for.  Often in this case a cancellation fee will be required to be paid.

If we look at the previous example of booking of accommodation for future travel the cancellation provisions are essential. It will often be the case that if a client has booked a number of rooms they will be able to cancel a certain amount before a certain date without incurring any cancellation fee. Any rooms cancelled in excess of this amount will incur a proportionate cancellation fee.

As the date the accommodation is booked for draws increasingly closer the amount that they are able to cancel without penalty should decrease as the cancellation fee for those cancelled in excess of the permissible amount will increase.

Limitation of Liability

All terms and conditions will contain a limitation of the liability in relation to the fulfilment of the contract and in some cases in relation to defective products. Care should be taken here to look at the Unfair Contract Terms Act to see if the clauses you wish to impose are in fact void.

Indemnity

In certain cases the client may be liable to the service provider in relation to losses and expenses incurred by them. Full terms and conditions will usually include an indemnity provision.

Looking at the previous example of accommodation booking the service provider could be expected to be indemnified by the client in relation to any damage caused by the client while using the accommodation booked by the original service provider.

Data Protection

You must make you client aware of your liabilities under the Data Protection Act 1998 in relation to the information which they will provide to you.

Dispute Resolution

It is often preferable to fully detail how a dispute between the two parties will be handled and also in which jurisdiction it will be handled. Often when selling over the internet the company may not be established in the same country which the client resides or is established. In this case it is often prudent to state the jurisdiction in which the dispute will be tried.