What should you do to incorporate your standard terms and conditions into your contracts?

20 Apr 2016

If you have gone to the time and the expense of having standard terms and conditions of sale produced for your business it is vital that you use them and that they are incorporated into your contracts with your customers.

In order for you to ensure that your customer contracts are governed by your terms and conditions you must draw your customer’s attention to the terms and conditions before the contract is formed. It is not enough for you to have your terms and condition buried away on your website or referred to on your invoices.

How do you form a contract?

For a valid contract to be formed, there must be a valid offer and acceptance of that offer and only upon such acceptance will a contract be formed. If on formation of the contract your terms and conditions haven’t been provided to the customer then they will not form part of the contract. Offer and acceptance could be done without you realising you are forming a legally binding contract, for example by fax, phone or exchange of emails. Therefore it is vital that you do as much as you can to draw your customer’s attention to your terms and conditions early and by multiple means if possible.

It is also important to ensure that your customer does not impose their terms and conditions of purchase on you. If they present their terms and conditions to you before the contract is formed and you do not formally reject them and confirm that your terms and conditions apply to the contract then the contract will be based on the customer’s terms and conditions which, in all likelihood, will be drafted in such a way that they are not favourable to you. This will cancel out the protections you have sought to provide for your business in your terms and conditions.

How can you try and ensure your terms and conditions apply to your customer contracts?

– Expressly state in any pre-contract correspondence, including quotations, that the contract will be subject to your terms and conditions and either include a copy of the terms and conditions or reference to them along the following lines:

This quotation is provided subject to [Company]’s standard conditions of trading (conditions) which can be found here [INSERT LINK]. These conditions apply to this quotation and any subsequent order notwithstanding anything to the contrary contained in or incorporated into any document from or oral statement made by you, the customer. No variation or amendment to the conditions shall be of any effect unless expressly agreed, in writing, by a person authorised to sign on behalf of [Company]. By accepting this quotation, I confirm that I have read and I accept the conditions and I am authorised to enter into a contract on behalf of the customer.

– Include a link to the terms in your email footers and confirm that all contracts formed with customers will be subject to these terms and conditions.

– Include a copy of your terms and conditions on your website so that they are easily accessible. If you sell on-line then you will need different terms and conditions to apply to on-line sales as opposed to off-line sales and your website order process should require customer’s to confirm they have read, understood and accept your website terms and conditions before they place an order.

– Although including your terms and conditions in documents which are only provided to the customer after the contract has been formed will not be effective to make those terms and conditions apply to the current contract, it is still useful to include a copy of the terms and conditions, or reference to them, in your delivery notes and invoices. Where you deal with repeat customers any such references will make the customer more aware of the terms and conditions for future purposes.

– If you receive terms and conditions from your customer then you need to formally reject these in writing and confirm that your terms and conditions apply (ideally attaching them to your rejection notice).

For further information on terms and conditions of sale and purchase, please contact the Corporate Team at Trethowans who will be happy to assist.