The Minefield of Drafting your own Terms of Business

Gemma Lingard, Corporate Law Solicitor at Gorvins Solicitors

Following on from my article last month on ‘What to Consider when Setting up a Business?’, the next step as a woman in business is to consider the minefield when it comes to drafting a set of Terms of Business.

A shot of an individuals hand signing their name with a fountain penAs a female entrepreneur starting your own business you have plenty already on your plate to think about. The last thing you want to be thinking about is drafting your own technical set of terms of business when you have clients to talk to, relationships to develop, things to sell, things to buy, services to provide, marketing to do and not even mentioning a potential family at home to look after. Yes, it may save you a few pounds now but you are likely to lose many more in the future through simple mistakes and overlooks throughout your terms. Drawing up terms of business, commonly known as Terms and Conditions, is a speciality area of law that needs to be done properly.

Our team here at Gorvins recently had to help out a woman who had drawn up her own terms of business based on a small business advice article they had read in one of the broadsheets. Although the article covered the main areas that a set of T&Cs need to address, we couldn’t help but feel that this woman would have benefitted significantly from some professional advice.

We see a whole host of T&Cs that businesses are using, including but not limited to:

• One or two lines printed at the bottom on an invoice
• Several pages of text often ‘adapted’ from a competitor
• A set cobbled together from a variety of different sources (usually from the internet)

The Main Concerns

Top of the agenda is often the payment terms – when they can raise an invoice and when that invoice is payable. However, looking at it from a lawyer’s perspective we always look at other aspects such as how we can limit your liability under the T&Cs if a ‘doomsday scenario’ occurs or to provide exit routes for your business if you’re getting messed about by a customer or maybe if there’s an unforeseen issues on the client’s side which prevents them delivering on the contract (it does happen!). It’s often these well drafted clauses that can result in a significant decrease in exposure and greatly reduce costs later down the line.

The procedure when issuing the T&Cs to customers is essential to get right, and it’s where you can receive a huge advantage from some professional advice, something which you can’t get from copying a competitor’s T&Cs. The most common mistake is to see terms of business written on the back of an invoice. What’s the problem with this approach you may ask?

The invoice is ‘after the event’ as from a contractual point of view, a contract is formed when one party makes an offer and this offer is accepted by the other party, which is a process that usually occurs at the start of the dealings and well before any invoices get issued! If the T&Cs are not incorporated into the contract by the ‘acceptance’ stage then they won’t form part of the contract and you may struggle to rely on your terms if there is an issue down the line.

Tailoring your Terms and Conditions

Your T&Cs are unique to your business and for this reason it’s vital that a professional sits down with you and understands the nature of your business so a tailored set of T&Cs can be produced, including any clauses which are slightly unusual or unique to your sector. Our team even goes as far as actually sitting down with the client’s in-house admin teams to talk them through the procedure, point out the pitfalls and train them to respond to the common issues as and when they arise. It is this added value where a relatively small investment in some professional advice at the outset can reap massive dividends down the line.

If you are interested in reviewing your T&Cs and the internal procedures you have in place for introducing these into the contractual chain with your customers, then please do not hesitate to contact me on 0343 507 5151 or email [email protected].

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