A gentleman’s word may be his bond, but if it turns out your customer is no gentleman, you need to be able to enforce your contract. With the English legal system being very heavily biased towards evidence, it’s very useful to have hard evidence of your agreement.
Without this, any court action can quickly descend into a “He said” / “She said” argument, and is unlikely to have a satisfactory outcome for anyone involved.
So your Terms and Conditions of Business is an essential document that sets out a number of key elements of your relationship with your customers. It clearly states the name and legal status of your business, an outline of the goods or services supplied (which can refer to a more detailed document, such as a quotation), how much you will charge, and when you want to be paid.
Well-drafted Terms and Conditions of Business can also provide a high level of protection to the business’ cash flow by stating what happens if payment is not received. Most often, this makes it clear that the goods supplied remain the property of the business until the customer has paid in full.
Finally, and most importantly, the Terms and Conditions of Business can limit the business’ liability in the event of any problems. This is important for anyone running a Limited Company, but an absolutely essential clause for anyone operating as a Sole Trader. Remember, a Sole Trader is personally liable for the business’ debts. A simple clause in the Terms and Conditions of Business can limit this liability to the value of the contract or goods supplied, and effectively indemnify the business owner from claims of consequential losses, which could otherwise run to millions in a worst-case scenario.
With the constantly evolving nature of the business environment, we also strongly advise a periodic review of your Terms of Business document. This ensures that it is up to date with any changes in the law, as well as any new laws or regulations. The latter is particularly important for anyone trading internationally – whether it’s from a small web shop or a supplier of specialist services to a global industry.
To talk about your Terms of Business, please feel free to contact us.