In my November 2018 blog article, one of the 6 key Legal Tips I listed was to “Put it in Writing”. This article tells you why having great Terms and Conditions documented is so important.
When starting up a business, the last thing you want to think about is the worst case scenario but if you don’t put terms and conditions into writing you put yourself at risk of uncertainty and misunderstandings. You need to cover yourself.
Your Business Transparency
Having terms and conditions protects your business but other parties such as customers also need to know where they stand in dealing with you. Terms and conditions have a vital role to play when it comes to two parties (customer/supplier, partners) understanding their duties, rights, roles and responsibilities.
Terms and conditions can save a lot of money by addressing all issues at the outset. This in turn avoids disputes later on about what might or might not have been agreed. Apart from the cost, disputes damage business relationships and your valuable reputation.
What To Include In Terms And Conditions
Well-drafted terms should act like a manual for doing business and provide absolute clarity on what should happen in a given situation. They should set out what the agreed terms are between parties and what happens if things go wrong or one party wants to leave or is unable to continue.
The exact items your terms and conditions should include depend on your individual business but you should consider including:
Many businesses include their terms and conditions on the back of their invoice, but arguably by then, it’s too late. Payment Terms can certainly be re-stated on an invoice but Terms and Conditions should be provided at the outset of a business relationship. This can be done in a fairly brief, easy to adapt, format. It’s also a good idea to display your general terms and conditions on your website.
What Happens If Terms And Conditions Are Not Clear?
Failing to specify terms can have a serious impact on your cashflow and your business relationships. You may end up in a situation where the customer thinks they will pay at the end of service delivery and you think you are being paid at the beginning or in stages, so you could end up having to pay for materials and staff before you have received the money from the customer. Another common example is a misunderstanding can occur as to what is being supplied and when.
Also, if you do not specify your payment terms very clearly, customers may be confused as to when payment is due or you have will have no right to charge interest for late payment.
One Size Does Not Fit All
It’s important to make sure your terms are specifically written for your business – you can’t assume another business will have the same needs as yours.
Consult a lawyer and avoid the temptation to copy someone else’s terms as their business is different and they may not have consulted a lawyer themselves. Consider it an investment. If well drawn in the beginning, terms and conditions should need very little modification as time goes by.
4 Tips For Working Out What You Need To Include In Your Terms And Conditions
When in doubt, seek help. Ask for advice from your mentor, fellow business owners, your accountant and your lawyer.
What if basic Terms and Conditions are not enough?
Most businesses will be able to get by with short form standard contracts (Terms and Conditions) for the supply of goods and services. However, in some cases it may be preferable to have a more detailed and traditional contract in place. A lawyer will be able to advise you what would be the best approach for your business.
Note from the Author
I get plenty of time to think about legal matters while I am on the road.
This blog shares those thoughts and also answers some of the many questions people ask me. Hopefully there is something of interest to you. If there is a subject you would like covered then let me know!
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