Importance of Having Terms and Conditions
Post Covid these are going to become more and more crucial. It never ceases to amaze us how casual some people are in business when it comes to terms and conditions. In your business, you may enter into contracts with your customers or suppliers on a regular basis and naturally the process can sometimes become rather casual. However, if you have no formal Ts & Cs and things go awry then disputes can arise as to whose terms and conditions apply to the contract. The situation can often be unclear, particularly when you both send paperwork, emails or letters to each (if you have no standard Ts & Cs then you may well be accepting theirs) and no specific agreement is then made as to whose terms will apply. First rule of Jeff Bezos of Amazon is that you must agree his terms and conditions before you can make him richer so here are some simple pointers.
- Negotiate the Contract
- Fire the Last Shot
- Beware the Exceptions
- Train Your Staff
Under the law of Contract the precedence over whose Ts & cs prevail is called the "Battle of the Forms" and it is easy to lose the battle if you are not alive to the issues. So, what can you do to reduce this risk?
1 – Negotiate the Contract
One way to avoid issues on what was agreed and when is to negotiate the terms of any agreement/ contract with your customer or supplier and record the agreement in a document you both agree.
This should ensure that both you and the other party are aware of and agree to the terms. Remember an email is a contractual document. Whilst this will not necessarily avoid a contractual dispute later on, this should ensure that the terms you have agreed are incorporated into any agreement/ contract.
However, we appreciate that it may not always be practicable to negotiate each and every contract, particularly when you could be making or receiving orders on a daily basis. You might therefore choose to negotiate terms at the outset of the relationship in an overarching agreement and then agree/contract on those terms thereafter, which will create a custom between you.
2 – Fire the Last Shot
The general rule is that if you ensure that you "fire the last shot" before delivery of the goods, you will win the Battle of the Forms.
If in doubt always make sure your terms are those sent and if they come back with variations or they send you their invest in checking what has bene sent to you. Remember you do not have to sign anything for it to be valid as a contract under English law.
3 – Beware the Exceptions
As explained in 2, the usual position is that the terms and conditions of person who fires the last shot will apply to the contract. However, there are exceptions to that rule.
Recent case law indicates that if there is clear evidence of "contrary intention" that alternative terms and conditions should apply, then the party who fired the last shot may not win the battle. This means that if there is a long-standing course of dealing between you and your customer or supplier, whereby you always contract on a particular basis, then you (or they) may be able to argue that those terms will apply to any future contracts. In these circumstances, if you want to avoid those terms applying, you should expressly agree terms with the other party (as indicated at point 1).
Perhaps more worryingly, in a recent case in which terms were not agreed (indeed each party had expressly rejected the other's terms), the Court decided that neither party's terms applied. In this situation, the terms specified in the Sale of Goods Act 1979 applied - which may leave a seller open to potentially wider liability. In a similar situation where you have both rejected the other party's terms, you should ensure that some conclusion about the applicable terms is reached before delivery is made.
4 – Train Your Staff
All too often it will be your junior staff who are tasked with making and receiving orders and so it is important that you ensure they are aware of the consequences of any paperwork they send (or fail to send), and, equally, receive.
As can be seen from point 2 above, it is important to ensure that you fire the last shot in the battle of the forms. You should therefore ensure that your staff take control of the process and ensure that all paperwork sent to the other party is stated to be subject to your terms and conditions. You could also consider giving your staff a checklist to work from when they are dealing with your suppliers or customers to ensure that you fire the last shot. In addition, if you are the seller, you may also want to persuade purchasers to submit orders on your own order forms which naturally will be subject to your own terms and conditions if you have included them.
And finally: remember KISS everything and always seek to work with your Ts & Cs. For those of you who do not have any Ts & Cs. Doh! Homer is at the nuclear powerplant if you want some help.
www.cwcontractlawandlegal.co.uk