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  • Writer's pictureSam Kuhn

Why Do I Need Business Terms and Conditions?

Business terms and conditions are basically your terms of trade, your contract with your clients.  Payment for the supply of goods and services is what keeps a business running, unpaid invoices cause cash flow issues and can impede the success of a business.

Too often we see businesses negatively affected where they do not have terms and conditions which could otherwise have assisted them and minimised their losses.

Why should I have Business Terms and Conditions?

Terms and conditions should be used for each transaction your business enters into with your customers (or clients) before you commence work.

They exist to protect your rights and further your interests.  They can allocate risk to parties in the event of a dispute or disagreement and avoid frustration when conflict arises.  Your business terms and conditions should cover a wide range of issues as set out below and be adequately drafted to provide the best protection for your business.

Benefits of having Business Terms and Conditions

A well drafted set of terms and conditions can define the entire relationship between supplier and customer from the start and through any ongoing relationship.  From what product or service is being supplied and how and when payment is made and what the obligations of each person are. Having well drafted terms and conditions in place at the outset of a transaction with your customer can minimise disputes later on in the working relationship.

Things to consider

Prior to drafting the following items should be considered at a minimum:

  1. Who are the parties?;

  2. What are the products or services you are supplying and what legislation is relevant to these products and services?;

  3. How do you want to enforce non-payment?;

  4. What happens in the event of a dispute between the parties?; and

  5. What happens in the event of bankruptcy and liquidation of your customer or you?

Key Terms and Conditions

The following are examples of some key matters that should be covered in an effective set of business terms and conditions:

  1. A clear definition of your products and services;

  2. Payment terms and your rights to charge interests on amounts owing to you under your contract;

  3. Warranties and guarantees;

  4. Delivery terms; ;

  5. Default provisions;

  6. Quality of goods (if applicable);

  7. Defects and damage ;

  8. The passing of ownership and risk of the goods;

  9. Intellectual property rights (if applicable);

  10. How the contract can be terminated;

  11. Any fixed term of the agreement (if applicable); and

  12. Relevant laws that govern your contract or your business or that you are required by law to disclose, such as Competition and Consumer Act 2010.

Your business terms and conditions should be specifically drafted depending on your business and what products and services you provide to your customers and the manner in which you provide them.

Many seemingly minor issues that are relevant to most business will be covered in business terms and conditions and will save business owners time, stress and money when a dispute arises down with a customer down the track.

Regular Reviews

As the laws applicable to your business and your business itself will change over time, your business terms and conditions should be reviewed to ensure they are still relevant.

Reviews should be conducted against new industry regulations or changes to legislation which affect your particular business.

If you require any assistance with the drafting or enforcing any terms of trade or with any other commercial legal issue, please do not hesitate to contact our dedicated commercial team.

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