English law requires four elements for the formation of a contract:
• an offer;
• a corresponding acceptance;
• consideration; and
• an intention to create legal relations.
Having properly drafted and signed terms and conditions will ensure that these four requirements are met.
Terms and Conditions allow you to ensure that each party is clear on the agreement and what will happen if either party fail to fulfil their obligations. In the unfortunate event there is a disagreement then referring to the terms and conditions may clarify matters and prevent the need for costly litigation.
Restrict your Liability
If things do go wrong then you want to restrict your liability. Know what you can or cannot limit and use your terms and conditions to protect you and your company.
An important point is that of limiting legal jurisdiction to England and Wales; e.g. if you provide a service to a foreign Company and it refuses to pay then unless you have specified that in the event of a dispute the laws of England and Wales will prevail you may have to sue in the other party’s country, under foreign laws.
Your terms and conditions can specify payment requirements and the consequences of late payment. Provisions relating to interest and compensation for late payments can be set out in your terms and conditions, equally early payment discounts could also be included to encourage prompt payment.
If Intellectual Property is likely to be created in the process make sure each party knows who will own it. Unless specified the creator owns it but this may prevent the party from using the products or services later if they do not ensure that those rights are transferred to them. Additionally if the creator is generating new Intellectual Property Rights you should make sure that when you finish the contract those rights are licensed to you in perpetuity so that you cannot later be prevented from using it.
Supports an Excellent Service
Use your terms and conditions to back up an excellent service and/or product. Your terms and conditions are an insight to how you run the rest of your company – what do poorly drafted terms and conditions say about the rest of your company?
Use your terms and conditions! Ensure that each customer/client returns a signed copy to you prior to commencement of their order. Finally keep the terms and conditions up to date – things change, such as VAT rates – you don’t want to be out of pocket due to outdated terms and conditions.
For further information or a review of your existing terms and conditions please contact Brendan O’Brien email@example.com or telephone 01992 558411.