Trading Terms

14 May 2012

Celia Worthington discusses the risks of using inadequate and informal terms and conditions and provides guidance on what should be covered by your terms of trade.

Many businesses supplying goods and services do so on the basis of informal arrangements or inadequate terms of trade.  This can lead to considerable difficulties if things go wrong. 

Businesses should therefore ensure that they have adequate and easily understood terms of trade also known as conditions of sale or terms and conditions. Not only should customers be made aware of their terms of trade but businesses should ensure that customers have agreed to them. Customers must be allowed a reasonable opportunity to accept the terms of trade so they need to brought to the customer’s attention at the outset of the relationship and before the contract is concluded.

Accordingly it is inadvisable for a business to have its terms of trade set out on the reverse of its invoice which is often presented to the customer after delivery of the goods or commencement of the services. If this is the practice, the terms of trade should also be made available at the outset, i.e. with the estimate or quotation or other written correspondence between the parties. The terms of trade for any business should reflect the way the business is actually conducted. Many businesses have terms of trade copied from those used for other businesses and, if this is the case, checks should be made to ensure that the terms used actually reflect the way the business is conducted and the nature of the business. Businesses should also ensure that their terms of trade are regularly reviewed. Terms of trade could for instance contain a different product warranty to that included in promotional material which is often updated without businesses ensuring that their terms of trade are also reviewed.

As a general guideline terms of trade should cover:

Delivery times – if this is not stipulated the supplier is bound to deliver the goods within a reasonable time frame and late delivery could allow a buyer to terminate the contract and claim damages – a supplier may want to attempt to limit this by stipulating that any time scale for delivery is an estimate only

Retention of Title – a supplier will normally want to retain ownership of the goods until it has received full payment allowing the business in certain circumstances to retrieve the goods in situation of non payment.

Alistair McKee & Celia Worthington at Worthingtons Solicitors Belfast regularly advise business clients and new start ups on the importance of having clear and reliable Terms & conditions at all times and are increasingly tasked with reviewing existing Terms to ensure they are as effective as possible in these straightened economic times.

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