Terms and Conditions of Business

Importance of the Terms and Conditions of Business

For most businesses there is a time when it is necessary to agree with customers what they are getting in terms of service and goods and what, in return they are liable to pay. In some cases, terms and conditions are relatively obvious for example in a shop where the items are readily available and prices understood but in other cases the terms and conditions can be convoluted and difficult to understand.

Terms and conditions can apply to goods and services equally and also apply to a business to business situation in the same was as they would for a business to customer situation. Legal requirements vary, but the contents of the terms and conditions should essentially state what is expected by and from each party. Increasing complexities with the internet have added to these requirements and all businesses regardless of their size need to consider how they deal with the issues between themselves and their customers.

General Requirements with Terms and Conditions

Although there are some differences depending on the nature of the business, certain factors will always have to be dealt with. For example, costs and product / services are fundamental to these terms and conditions. Payment terms are a central and critical element of all terms and conditions. Are up front payments required? Is it payment on delivery? Where there are services involved it is also necessary to consider how the fees will be calculated and when they should be paid.

Other issues such as how interest will be calculated where there is default or how the contract can be terminated due to non performance from either party. Information relating to the actual product or service being offered and any conditions that are associated with these offering such as colour or weight as applicable should also be contained in the terms and conditions.

Website Based Terms and Conditions 

When goods and services are offered online they face additional requirements in terms of what needs to be stated during the purchasing process. With a website it can be difficult to ascertain where exactly the product or service is coming from and who is providing the service including their credentials. Other information such as how the contract can be cancelled should be contained and a clear way of allowing consumers to contact the provider if they wish to change the order or cancel. As this is a distance selling situation there are other requirements that must be met such as offering a cooling off period for purchasers.

Goods must also meet with certain descriptions that are clearly more important when it comes to purchasing over the internet as it is not possible to purchase through the use of samples. Security issues such as how to accept payments online will also be relevant and ensuring that the website is adequately updated and managed will become part of the regular business decision making processes.

Provisions of Services Regulations

One of the latest additions to the requirements has been brought in as a result of European legislation. The Provisions of Services Regulations which came into force in late 2009 place specific requirements on those providing services to the public. Very commonly service providers will undertake work or make the consumer liable for some payment before any terms and conditions have been entered into. Take for example the electrician who comes round to the house to fix a problem and having done so furnishes the customer with an invoice. Whilst this may seem practical in reality it exposes both parties if the full terms and conditions are not understood.

These regulations require the customer to be told exactly what they are receiving, how much they will be paying (or how the final fee will be calculated) and the identity of the individual parties. This not only meets with the regulations but also protects the business should there be a payment dispute in the future.

Practical Considerations with Terms and Conditions

The Business Model

The most relevant form for the terms and conditions to take will depend on the nature of the business. A one man electrician is not going to want to use terms and conditions extending over multiple pages. On the other hand a company that offers very complex products or services will need to have multiple terms and conditions to deal with the various different eventualities.

Ongoing Management

Terms and conditions will change on a regular basis to take account of the business itself and also to deal with changes in legislation and regulations. As new distribution channels become available it is likely that the terms and conditions will have to be reviewed. Copies of signed terms and conditions should be kept on file and these need to be regularly updated when clients are long term.

Practical Tips

  • Consider the appropriate nature of the terms and conditions for the business type in question.

  • Look at all distribution channels such as websites to ensure that the terms are appropriate in all circumstances.

  • Regularly review the terms and conditions as climates change and requirements are amended to take account of changes in the business.