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.
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
- Liability limits
- Disclaim or limit your liability for failure or delay caused by force majeure
- Service timing that the client should expect
- Legal jurisdiction
- Data protection provisions (if transfer or processing of personal data occurs)
- Actions to be taken if a breach of contract occurs
- Customer service:
- Complaints procedures
- Cancellations procedures
- Dispute procedures
- Payment terms, interest on late payments and withholding of payments
Include all parties involvedThe 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 understandIt 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 possibleYour 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 optionsIt 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 paymentA 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.
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 timesAll business owners strive to avoid errors, misrepresentations or failed relations. However, they do occur. Your brilliant T&Cs will help you at those times. You will be pleased that you paid careful attention to the specific clauses relating to the conflict. The wording will depend on whether a product or a service is being sold. A product may clearly have a fault or be broken. A service could be training, teaching or consulting. Here are examples of clauses that might be relevant to your business:
a LiabilityThis clause helps limit the damages paid out (your exposure) to clients in the instance of a failed product or service. These do not resolve you from true negligence.
b TerminationThis is where you will state the start and endpoints of the contract. It will also discuss what will take place if early cancellation occurs from either party, such as:
- When may the business cancel the contract?
- What factors would trigger a refund to the client?
- Will there be a cancellation fee?
c Dispute resolutionDispute resolution can save lots of legal fees and preserve relationships. Design a clear problem resolving process between you and your clients.
d Legal jurisdictionYour business might be an importer, exporter or trade digitally. Regardless of your location being Fordwich, Kent or Kingston, Surrey, you need to choose the country and courts in which your contract disputes will be heard.
e Additional important detailsIf you are a designer or a tech company, you need to protect your intellectual property. If you need to detail how you will protect any personal information received from a client (The DPA 2018 governs data protection law in the UK, amended on 01 January 2021 to reflect the UK’s status outside the EU). Every business is different, so each set of T&Cs should be different, reflecting the specifics of your business and your brand values. Please note: this article is written for guidance and information purposes only. It should not be construed to constitute legal advice.
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