Whilst it is tempting to agree terms of a transaction on the basis of a
handshake or an email, a canny buyer or supplier should always ensure
that he has entered into robust, sound terms which cover the necessary
terms. Contracts are the glue that seal the relationship between a
business and its customers or clients and provide certainty.
Without that certainty, disputes can arise on the precise nature of
what goods or services are being provided, their price or the terms of
payment. None of these issues are in themselves particularly
complicated, but they do need to be written down clearly and
unambiguously if problems are to be avoided. And since there is a lot
of similarity in the various types of business transactions, a standard
form can be produced by a professional draftsman and sold as a
template. And, just as with clothes bought off the peg that require a
few alterations, if you need some adjustments, they can be done by a
professional solicitor for much less than if you asked him to write the
entire document.
There is plenty of advice on the web for small businesses but the need
for proper contract terms gets inadequate coverage even on websites
such as Business Link. Not only are standard terms needed to protect
your business, they also give the business a more professional
appearance. The document does not have to be lengthy – there are maybe
a dozen clauses that a straightforward supplier of goods or services
needs and these can be printed on a single page without being
illegible.
In addition to price and payment, the terms can cover what happens if
the client wants to change the scope of the supply or services;
retaining ownership of goods until they have all been paid for;
delivery dates and delay, termination for breach of contract;
limitation of liability etc. And don’t be nervous about clauses that
are designed to give you some reasonable protection and limit your
liability in a reasonable way -– the great majority of clients probably
won’t read the terms in detail anyway! The important thing is to be
sure they are given the terms and sign up to them.
It is also important to remember that in some circumstances you are
required by law to have terms of business – for example if you are
selling goods online you need to have terms that comply with the
Distance Selling Regulations. In addition you will probably need a
privacy policy as well as having certain company information displayed
on your website. And if you are employing staff, they will need to
have their contract terms provided in writing.
So don’t leave things to chance by going into business without proper
contract covering the vital issues: as Warren Buffet said: “It is only
when the tide goes out that you see who has been swimming naked!”
Giles Dixon
Solicitor & Founding Director of ContractStore.com
