Terms and conditions – why they’re worth revisiting

REVIEWING terms and conditions isn’t something high up the business “to do” list, but the discipline is well worth the effort. Helen Bell, commercial solicitor at York-based law firm Langleys explains the benefits particularly in turbulent economic times.

“We find that many businesses do not review their terms and conditions of trading despite continual changes in the economy, legislation and general trading practices. A growing number of organisations are starting to suffer from slow payers, overdue accounts and customers going out of business.

Now is the time to look at your terms with a fresh pair of eyes to see whether you need to amend them so that your business can trade on more favourable terms. In carrying out this exercise you will also have gained the additional benefit of being well prepared for the future upturn in the economy.

Here are some top tips for recession proofing your terms and conditions:

• Incorporate your terms into contracts, It is not enough to simply print them on the back of your invoices – failure to do so could mean that the buyer’s terms prevail.

• Check that your terms have a ‘retention of title clause’. This will enable you to retain ownership of the goods and under certain circumstances, retrieve them should your buyer become insolvent or fail to pay your bill.

• Consider your payment terms. Are they overly generous, in which case do they need to be revised?  You might even consider incorporating a prompt payment discount.

• Exclude your uninsured risks as far as the law permits

• Make sure your terms exclude liability for breach of contract where delay or failure to perform is as a result of an event outside of your control: for example, crop failure, import ban, unavailability of materials

• Incorporate flexibility in your pricing mechanism. This will help you cope with, for example, increases in the cost to you of raw materials

• Check that your terms allow you to stop delivery of goods or services if you have not been paid: If you stop delivering without having a clause that permits you to do so, you could be in breach of contract even if your customer has not paid outstanding invoices.

If you are not doing the above, you may benefit from a terms and conditions MOT whereby your current terms of trading are assessed and advice provided on if and how they can be improved to enable you to better protect your business.”