For many entrepreneurs and business owners, creating the terms and conditions of their trade is the least of their priorities. Instead, they concentrate on marketing products and finding customers.
However, neglecting such a task could have a negative impact on your cashflow through delayed payments. You could also waste both time and money on collecting debts due to the lack of agreement between you and your clients.
While late payment is not unusual for business owners, setting up the proper terms and conditions can help reduce, if not eliminate, such delays.
What are Terms and Conditions (T&Cs)?
They are the part of the contract that sets out the terms of your sale and business. You specify the conditions that your client must meet to get your goods and services.
Why are they important?
If you don’t specify the terms and conditions, you’re inviting uncertainty and misunderstanding.
Legally speaking, if it’s not in writing, you’ll have no proof. So in the courts, you can use the written terms as evidence. Think of the T&Cs as a means to protect your business from liability and assurance of prompt payment.
Steps in writing terms and conditions
Well written T&Cs should provide clear instructions on what to do during particular situations. As long as both parties follow it to the letter, money is saved, and possible disputes are avoided.
Since no businesses are alike, the exact terms will vary but you should consider the following:
- Clearly specify the products or services that you provide
- Set the price and payment terms for such products or services – when you expect payment
- Agree how and when a sale or service is delivered
- State any guarantees or warranties you may offer
- Specify the customer’s obligation
- Include cancellation options and penalties, eg what either party should do or expect if there’s no delivery or non payment.
Writing your document in plain English will prevent any possible misunderstanding. If you need to include industry-specific jargon or complicated terms, define them. List all of the terms/jargon and their meanings, and place this list before the main part of the contract or agreement.
You could also use clause numbers and titles to make it more understandable. By using clear and plain language, you can avoid customer claims of not understanding the T&Cs.
Include T&Cs in your invoice
Although it’s not a legal requirement to include terms and conditions on your invoices
Dangers of copying T&Cs from other companies
You may attempt to copy the terms and conditions of other businesses. However, such a strategy may backfire and cost more harm to your company. Don’t assume that other firms have the same needs as yours.
Tips for creating your own terms and conditions
- Come up with every possible scenario that could possibly go wrong and how you could solve them.
- Put yourself in the customer’s shoes and use language that’s friendly and understandable.
- Think of all the likely things that your client would complain about and provide a solution beneficial to both parties.
- Include clauses that will protect your business from annoying or frustrating clients.
When in doubt, seek advice from experts.
Setting up your company’s terms and conditions is a tedious chore, but will protect you from possible legal disputes and help keep the cash flowing.
To ensure that your T&Cs are legal, include your full registered and trading name, company number and registered address. You’ll need such information to enforce your claims.
While you can write your company’s T&Cs, it’s best to have the help of lawyers or contract consultants who will check everything from the draft to the final copy.
Author : Kerry Gibbs is a legal expert at BEB Contract and Legal Services. BEB provide small to medium sized businesses with legal and contractual support.
DISCLAIMER: This article should not be regarded as constituting legal advice in relation to particular circumstances. It is merely a general comment on the relevant topic. If specific advice is required in connection with any of the matters covered in this article, please speak to BEB Contract and Legal Services directly.