Firstly, your failure to include the right terms in your Ts & Cs will leave you vulnerable, and secondly you can significantly reduce your risk of being involved in, or losing, court actions simply by laying down procedures for the use of Ts & Cs and providing training to your sales and purchase staff.
Ts & Cs set out what the parties to a contract agree will happen during the course of the contract and after something has gone wrong with it. If you are selling or buying any goods or services, you should do so on your terms if you can. Whether you are able to do so will often depend on your bargaining power, but you can also impose your own terms simply by dealing with your Ts & Cs and those of the other party in such a way that, most of the time, your own terms prevail.
Whether or not your Ts & Cs apply to the contract is a matter of fairly complex contract law. A contract is concluded when a firm offer is unequivocally accepted. A firm offer is something more than a list of goods in a catalogue; it is usually an order or a quotation. An unequivocal acceptance is one which does not introduce new terms into the deal. If a purported acceptance introduces new terms to the deal, it is generally not an acceptance but a counter-offer, which can be accepted or rejected by the other party.
1. Send out your Terms and Conditions early and often
Your Ts & Cs must be communicated to the other party before the acceptance occurs. If they come afterwards, they are too late to be part of the deal. If they come along with the acceptance, the acceptance is not an acceptance but a counter-offer. Therefore, printing your Ts & Cs on order acknowledgements, invoices, and delivery notes is often not enough. They should be printed on advertising such as brochures, websites or quotations.
2. Be the last party to table your Terms and Conditions before the acceptance
The party who sent its Ts & Cs to the other party last, as long as it was before the acceptance, will usually find that its Ts & Cs prevail. If the other party sends you its Ts & Cs after you have communicated yours to it, you should not conclude the contract until you have resent yours to it, stating that the contract is on your terms. For example, if your terms were printed on your quotation, but the customer’s terms were printed on its order form, the customer’s terms prevail unless you reaffirm the fact that your terms apply when you accept the order.
3. Have a written acceptance procedure if possible
Sending customers written order acknowledgements/acceptances referring to your Ts & Cs is a good way of ensuring that your terms are the last ones to be tabled before the contract is concluded. However, if the customer has not already seen your terms, or has tabled its own terms, this is a counter-offer and you should either get the customer to agree explicitly to your terms or state on the order acknowledgement that unless you hear from the customer within, say, five days, the counter-offer will be deemed accepted. The best way of ensuring that your terms apply is to get the other party to sign a copy of your Ts & Cs signifying their acceptance of them.
4. Keep records
Keep all your letters and notes of telephone conversations; in a court case, whose terms apply is always a matter of evidence.
It is wise to establish a process for dealing with Ts & Cs. There is no set way to do this, and basically it is just a matter of collecting evidence that shows that your terms apply. The best evidence that your terms apply is a copy of your Ts & Cs which has been signed by the other party, accepting them. It is not always possible to get this, though.
Situation: You are the seller of goods. Your customers can see what is for sale by looking through a catalogue, and can place an order by writing to you or phoning you.
Process: You should print your Ts & Cs in the catalogue and on any order form you provide to the customer. State in the catalogue that all sales are subject to your Ts & Cs. If the customer does not use your order form to place its order, you do not have a problem unless the customer has attempted to introduce its own terms. If it has, you should not accept the order until you have told the customer your terms will apply and asked for acceptance.
Situation: You are the seller of services. Your customers request quotations, you provide the quotations, and the customers can place an order by writing to you or phoning you.
Process: You should print your Ts & Cs on any sales literature you have, and on the quotation. State on the quotation that no order submitted by the customer will be deemed to be accepted until confirmed in writing by you. On receiving an order, send the customer a written acceptance stating that your Ts & Cs apply. If the customer has introduced its own terms along with its order (or before you have sent your acceptance), you will need to ask the customer to accept this counter-offer perhaps by sending you back a slip confirming that it agrees that your terms apply.
When drafting Ts & Cs, the choice of terms will vary according to whether they are designed for sale or purchase, and goods or services. In many cases, there will be a mixture of goods and services being sold or purchased.
Basic terms to include govern:
The Ts & Cs should be drafted to (a) achieve what they are intended to achieve, and (b) comply with the law. Below are some of the questions which should be asked.
Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.