Terms and conditions of trade are an essential part of any business where people provide services or goods on credit or engage in regular contracts with customers where the work might be carried out over a period of time.
Having robust terms and conditions of trade is the best way to protect your business. It is your first (and often only) opportunity to contract with your customers on your terms, rather than implied terms which may not work in your favour.
One of the most common mistakes businesses make is to have their terms and conditions of trade on the back of their invoices. When an invoice is issued, this will be the first time your customer has seen the terms and conditions of trade and they are not bound by them.
You must produce your terms and conditions at the time of entering into the contract. This is when a customer approaches you to engage your services or to open an account with you (if you have trading accounts). It is recommended that you always require terms and conditions to be signed.
We also recommend that if you are entering into a trading account with a company that you obtain a personal guarantee from the principals of that company.
Depending on your business, terms and conditions of trade should include:
Penalty interest (if there is a default);
The ability to recover your full solicitor/client costs so that you are not penalized for any delays outside your control for the provision of goods or services;
Any price is given as an estimate (if that is the case);
If security is required;
The due date for payment of accounts;
If you are in the building industry, materials may be changed depending on availability;
You are not liable for any consequential losses as a result of delays or faulty products.
If you operate trading accounts, when your terms and conditions are signed and returned, you should register the charge on the Personal Property Securities Register. This requires certain clauses to be included in your terms and conditions of trade.
These are just some examples of matters which should always be in your terms and conditions of trade. We do not recommend that you cut and paste from examples you find on the internet without receiving professional advice before using them.