Getting your contract right

Most businesses have their own terms and conditions of trading.  These normally aim to give you rights if the other party defaults and provide protection if a claim is made against you.  However, they will be of limited use if they are not reviewed and updated on a regular basis.  They are useless if they are not incorporated into your contract with the customer.

In simple terms you need to make sure that the terms and conditions are part your contracts.  The clearest way is for them to be included in the physical contract document that is signed by the customer.

If the customer is important to your business operations you should consider a specifi c, bespoke written contract which sets out all the important points and includes the terms and conditions.

You could ask other customers to sign up to your terms and conditions when they open an account with you and ensure that all your relevant documents have the terms and conditions on them. This would include quotations, confirmation of orders, invoices and delivery notes.  If you are sending any of these by fax or e-mail do not forget to include the reverse page if that is where the terms and conditions are printed.

Be careful not to fall into the trap where the customer's own terms and conditions become incorporated into the contract in place of your own.  This can happen where you quote on your own terms and conditions and the customer that quotation but on his own terms and conditions.  If the order goes ahead on this basis you could be deemed to have accepted the customer's terms and conditions to the exclusion of your own.

Many disputes boil down to a 'battle of the forms', where the parties argue whose terms and conditions apply.

Some key areas to consider for inclusion in your terms and conditions include:

- Limiting liability.

- Quantifying loss by liquidated damages where possible, to prevent costly arguments on the level of the claim.

- Provisions reserving your title to goods until they are paid for.

- Allowing you to set off claims and losses against monies due to a customer or supplier.

- Dispute resolution procedures.

The lessons are simple:

- Keep your terms and conditions up to date.

- If your customer is key, make a specific contract that incorporates your terms and conditions.

- Otherwise, make sure that your terms and conditions are made part of the contract.

We can help you by giving specific advice on these matters and training, tailored to your requirements, to all staff involved in the contract process within your business.

If in doubt please do not hesitate to contact us...

Nick Carr

0845 404 1520

nick.carr@cobbetts.com
                      
Jon Hainey

0845 165 5426

jon.hainey@cobbetts.com

Keith Mills

0845 404 2426

keith.mills@cobbetts.com

The content of this briefing note is for information only and should not be relied upon as a substitute for legal advice.  Copyright 2009 Cobbetts LLP - All rights reserved - February 2009