Litigation - Terms and Conditions

Do your terms and conditions protect you?

 

You paid a lot of money to get your Solicitor to draw up some contractual terms and conditions. They contain all sorts of useful exclusion clauses, a well drafted Retention of Title clause and they look very impressive. You had them nicely printed on the back of your invoice so every customer ends up receiving a copy.

Then, when you have just made a large delivery which is sitting on a pallet on the customer’s warehouse floor, you get a call to say the customer has gone bust. No problem – your terms and conditions contain a Retention of Title clause. And yet, when you call your Solicitor, all you hear is a long sigh!

It is surprising how often clients find themselves unable to rely on their terms and conditions because they have not been incorporated in the contract with the customer. In simple terms that means that when you “do the deal” with the customer, that “deal” has to include the fact that you are contracting on your terms and conditions and the customer has to agree that. If the first time that your terms and conditions are mentioned is on the back of the invoice then that is far too late.

If you take an order over the phone and agree there and then to supply the goods then a contract has been made. Putting your terms and conditions in the post to the customer as an afterthought will not magically change the original agreement so as to incorporate your terms and conditions into the contract.

It can also sometimes be difficult to establish exactly when a contract has been made. You will often receive orders from customers saying that the order is placed on their terms and conditions. If you send an order acknowledgement which confirms all the details on their order except that you are in fact trading on your terms and conditions, then you still don’t have a contract. You have not agreed all the principal terms because you have not agreed whose terms you are contracting on. If the next thing that happens is that you make the supply then your terms and conditions will apply. That is because your terms were the last set to be sent before the contract was actually fulfilled. If, however, you get a further communication from the customer, perhaps changing a detail of the order, you still need to send another order acknowledgement to ensure that your terms and conditions are the last ones sent.

So, what can you do to avoid that “long sigh” from your Solicitor:-

• ensure that your terms and conditions appear on the reverse of your quotations and acknowledgements of order; 
  
  
• ensure that on the front of your quotations, acknowledgements of order and any other documentation you produce when entering into a contract it specifically refers to the fact that you are contracting on your terms and conditions;
  
  
• make sure a copy of your terms and conditions do go to the customer. How often do order acknowledgements get faxed to a customer without the reverse side being sent?
  
  
• ensure that a clear record is kept of how the customer received the terms and conditions. Ideally, get the customer to agree in writing that in return for you providing any period of credit, the customer will, in future, contract on your terms and conditions;
  
  
• decide on a “procedure” by which your company will enter into contracts with customers and then ensure that your staff stick to that procedure.
  
  

In these difficult economic times, you may need to rely on your terms and conditions sooner than you think. Make sure that you can! 

 

For further information on the content of this article or if you require assistance in a dispute with a customer or supplier concerning your company’s terms and conditions please contact Charles Clay

 

 charles.clay@borneos.co.uk

 (01908) 696002