Whether you are a company, a sole trader or partnership, consideration should be given to adopting some form of written standard Terms of Business when dealing with customers or suppliers. Terms of Business regulate the contractual relationship between you and the parties that you deal with.
In the absence of these standard Terms of Business, you may find yourself subject to your customer’s own Terms of Business or trading, some of which may prove costly to you.
Written Terms of Business:
They will inevitably include terms for payment of the goods supplied and terms of delivery. Furthermore, if you are a supplier of specialist goods or services, you may wish to add particular provisions governing those products or services.
There are some basic provisions which ought to be addressed in a set of standard Terms of Business. These include:
If your customer fails to pay on time you will want the right to refuse to deliver any further goods and you may also want the right to claim interest on any outstanding payments. Of course, much depends on the relationship between you and your customer. However, if matters did get to a point where you could no longer afford to provide your customer with free credit, recourse to the Court may be necessary and your payment terms will be an important element in the rights of recovery. For more information about our debt recovery service, please go to the debt recovery section.
When dealing with individual consumers rather than businesses, further care and attention is required as the law gives additional protection to them. For example, your Terms of Business must be fair and reasonable and you cannot exclude certain statutory consumer rights.
There are certain do’s and don’ts when applying your Terms of Business. As a basic rule:
EVERY customer should be made aware of your Terms of Business.
This could take the form of:
Customers’ own conditions of business
Consider these carefully. For example, a supplier may have conditions of supply, which may seek to override your Conditions of Purchase. It is important that you consider any supply conditions and ensure that your conditions of Purchase will apply. This is referred to as ‘the battle of the forms’ and the Courts will normally deem the last Terms of Business to be delivered to be the one to prevail. However, it is best not to rely upon this and negotiate with your customer or supplier in such circumstance with the help of your solicitors.
Other Vital Contracts
The standard Terms of Business form part of the contract or the bargain between you and your customer. Other contracts are equally important and often critical to a business:
There may be occasions where you wish to distribute products on behalf of domestic or foreign manufacturers. The terms of that distribution would normally be contained within a Distribution Agreement.
Similarly, where you wish to appoint agents to sell your product, you may enter an Agency Agreement. Regulations surrounding agents and agreements are governed by European Law. At Black Norman we can assist to guide you through legislation and draw up the necessary agreements.