10 Essential Questions for Standard Terms of Business

Most businesses need standard terms to operate, and it’s important these are kept up-to-date.  Steven Grant, Partner in the Company Commercial team, here answers 10 of the most common questions asked by clients.

1.  Where do I start? 

Think about why you need them, who you’ll be doing business with, what could go wrong and where you’ll be using them.  Learn from previous mistakes or, if your business is brand new, try and imagine what could go wrong.

2.  Can I simply use standard terms used by my competitors? 

No.  This would be a breach of copyright.  Moreover, your terms should be personal to you and should deal with the issues that are relevant to your business, not your competitors.  By all means look to them for inspiration but don’t copy them.  We’ve actually seen people use competitor’s terms and not change the company name in places! 

3.  What is their purpose? 

Good terms of business have several purposes. Their primary purpose is to limit commercial risk.  Beyond that they should record what each party has agreed to do and reinforce your brand values and image.

4.  Do I need different terms for consumers and businesses? 

That depends on what you are doing.  The law gives greater protection to consumers and so we suggest two sets of terms is best unless you are happy to give the same protections to businesses.

5.  Can I use my terms on my website? 

You will need terms specifically designed for use on your website.  The legal and commercial issues are different if you contract via your website and so your terms should be designed to cover those things.

6.  Can I use my terms to trade internationally? 

Yes but you need to make additional checks.  Make sure your terms are subject to English law.  Bear in mind that mandatory local laws may apply in which case it is essential to get your terms reviewed by a local lawyer to see whether anything is unenforceable or worse, illegal.  We can find a lawyer to help with this anywhere in the world.

7.  How often should I review my terms? 

The law can change often and so your terms should be reviewed often too.  Terms can become unenforceable or illegal with changes in the law.  We offer a watching brief service to notify changes and to update when necessary.

8.  Should I use my terms with everyone? 

Not necessarily.  Sometimes it will be best to negotiate a bespoke contract, for example if the contract is high value, contains unusual terms or terms that may otherwise be considered unreasonable and therefore unenforceable in standard terms.

9.  Should my terms be written in legal jargon? 

No.  They should be written in language that is appropriate to your industry.  Above all else they should be clear and precise and avoid unnecessary legal jargon.  This will ensure your terms are a useful reference point and will help you enforce them if you ever need to.

10.  What if my customer or supplier also has standard terms? 

Check their terms and decide whether you would prefer to do business on your own.  We can help you by reviewing and reporting on terms supplied by others.  Don’t start to perform under the contract if you wish to reject their terms.  Instead be very clear and write to reject those terms and offer yours instead, giving reasons why yours are more appropriate.  We appreciate however that commercial bargaining strength will play an important part here.

If you’re looking to draft your terms of business, or you need your existing ones reviewed, then contact Steven or one of the Commercial team on 02380 717717 or email stevengrant@warnergoodman.co.uk.

ENDS

This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice.  All content was correct at the time of publishing and we cannot be held responsible for any changes that may invalidate this article.