The benefits of using written Terms of Business

Terms of Business

Almost every business, large or small, transacts with customers and suppliers on a daily basis. Each time a business sells goods or services to a customer, or buys goods or services from a supplier, a contract is formed between the parties. Having written Terms of Business in place provides clear evidence of each party’s rights and obligations.  This can be crucial in ensuring that a business is able to recover its fees, limit its own liability and refer to a detailed specification of works.  In the event of a dispute, written Terms of Business can also save time, money and even the commercial relationship between the parties.

Some of the most important clauses that can be included in bespoke Terms of Business are:

Specification

This is a full description of the goods or services being provided to the customer. You should clearly and accurately outline the scope of the goods or services being provided. By doing this a business can avoid disputes over whether or not the specified goods or services have been provided.

Limitation of Liability

A business can limit its liability for losses arising as a result of incidents beyond its control.  This may include where the specification could not be met on time because of an act of God, or the misuse of goods by the customer themselves.

It is also important for a business to take reasonable steps to limit its liability for certain areas of loss.  In particular, a business should seek to exclude any liability for the loss of future profits.  A failure to exclude such liability could lead to a crippling claim against the business.

Delivery

A clause outlining the process of delivery is extremely important to ensure that the expectations of the parties are aligned and the timing of delivery is clear. This clause can also be used to ensure that a business cannot be held liable for losses stemming from delayed deliveries, where time is not of the essence within the contract.

Title and Risk

It may be presumed that goods become the property of the customer at the time that they are delivered. But what if they have not been paid for? Title clauses provide that ownership of  goods only passes to the customer once they have paid for them in full. You will therefore have the option to recover the goods from the customer if payment is not received.

‘Risk’ is the responsibility for the safekeeping (and usually insurance) of the goods. Ownership of the goods should remain with the supplier until the customer has paid for them. It is sensible for the risk for insuring the goods to pass to the customer once they have taken delivery.  If nothing else, a business will come across significant practical difficulties in seeking to insure goods not in its possession.

Written Terms of Business add credibility to a business’ commercial offering; they protect the business’ commercial position and they provide clarity between contracting parties.  They remain invaluable for commercial entities of all sizes, in all industries.

For assistance in preparing a bespoke set of Terms and Conditions or reviewing your current terms, contact Luke Pritchard on 01270 625478. You can email at luke.pritchard@poolealcock.co.uk. Alternatively, you can visit our commercial services page here for more information or fill in this form and we will get in contact with you at your convenience.