A thorough terms and conditions (T&Cs) document is highly beneficial for any business, big or small. Not only do they set out the conditions between a company and their customers, they also potentially shield you from a plethora of costly losses.
What are business terms and conditions?
Your business terms and conditions, once signed or clicked to accept, immediately establish a legally binding relationship between you and your client. They also give the client upfront knowledge of the parameters of conducting business with you, such as:
The product or service you’re providing;
Related specific guarantees or warranties and statutory protections;
Payment terms and non-payment implications;
The law governing the contract
Other related and important details of your business, product or service.
To ensure your T&Cs are enforceable, investigate and refer to specific regulations that apply to your industry. A court may not, for example, approve that you charge an exorbitant interest rate on outstanding monies.
It is not illegal to NOT have T&Cs. They are an astute business tool for business owners to protect themselves instead of using the country’s broader law. Some small businesses may not need them, such as small, owner-run greengrocers or small convenience stores (with only a couple of branches and no website). It will still be prudent to check with a professional if a small set of T&Cs would benefit you.
Their importance in your business cannot be stated strongly enough. Your business will benefit from increased business clarity and decreased legal risk.
How do you write a T&Cs?
T&Cs must cover legal details, important details and obvious details such as:
Price and payment terms
Intellectual property rights protection
Disclaim or limit your liability for failure or delay caused by force majeure
Service timing that the client should expect
Data protection provisions (if transfer or processing of personal data occurs)
Actions to be taken if a breach of contract occurs
Payment terms, interest on late payments and withholding of payments
Include all parties involved
The contract must also state who the contract is with because all parties (including lawyers and potential Courts) need to know who exactly is legally bound by this contract. Your T&Cs can’t protect you from things that can’t be protected by the law, e.g. true negligence. There are different protections under the law for individuals and consumers versus larger businesses.
Make it easy to understand
It is also important to write them in user-friendly language, not thick legalese, as your clients need to be able to understand them easily, or they could become a factor of dispute.
Make it as clear as possible
Your approach should be to set out a painstakingly clear definition of what products or services will be provided in detail. Never assume that the client or the court will ‘assume’ that certain aspects are included or excluded.
When it comes to the quality of your product or service and the handling of refunds, you will find the law prescribes certain standards.
Include relationship options
It is important to be mindful that T&Cs are not there to ‘wrangle the client’ and cover your faux pas. They are there to create a clear business relationship and to protect against a failure in the relationship. In light of this, it would be good to include relationship options such as an extended cooling-off period, a money-back guarantee within a documented time period or a client-friendly exchange policy that trounces your competitors.
Create clear terms of payment
A section of the T&Cs that is close to the heart of business owners is the terms of payment. This section would probably best be designed by an accountant. The terms must be very clear about your business’ expectation of payments that will be required from the client. Your payment terms might state that, for example:
You require a whole payment or partial payment in advance,
Then an interim payment at a milestone (e.g. delivery of cabinetry carcasses)
With a full and final payment on delivery,
Or the use of a 30-day credit facility.
This section of the T&Cs will also clearly state what will happen if payment is late. For example, will interest be charged, when will the client’s file be handed over to debt collectors, who is responsible for additional costs related to this, etc.
When does contract binding start?
In the eyes of the law, a contract is not binding if one of the parties was unaware they were being bound into a contract. Due to this, to establish a contract, you must first OFFER the contract to all relevant parties. They must read it, and the contract must state clearly, what action on their part will be construed as ‘activating’ the contract, i.e. signing, clicking, paying etc.
The party/ies need to accept the offer – the offer is the presentation of the T&Cs as the legal guideline for conducting this particular business transaction. It is essential to carefully and unambiguously word, in your T&Cs, the precise moment that the contract becomes legally binding.
The law sees a contract as binding if there has been an offer, a clearly chosen acceptance, consideration and intent to create legal relations.
Clauses for conflict times
All business owners strive to avoid errors, misrepresentations or failed relations. However, they do occur. Your brilliant T&Cs will help you at those times.