Terms and Conditions (Ts & Cs) are an essential part of all businesses. They should provide clarity for customers and strike a fair balance to encourage business while offering you sufficient protection from the distraction and cost of disputes. Inadequately drafted and you could find yourself facing serious problems such as cash flow problems, business relationship breakdown and even court action.
We often handle disputes for clients which are directly related to the way their Ts & Cs are drafted. They may have been borrowed from another business or even downloaded from an entirely different jurisdiction! In any case, it is not uncommon for businesses to be operating under terms which are either totally unsuitable or do not go far enough to cater for what is required.
Ts & Cs are as important to a business as a map is to an explorer. Without the right one you will likely find yourself in difficulty and considerable time will then have to be spent trying get back on the right track; time better spent making progress on your objectives.
Even something as simple as late payment of an invoice can be seriously disruptive but with the right Ts and Cs and mechanisms in place the risk of having to chase customers can be dramatically reduced. Other provisions relating to, for example, the parties’ obligations, assignment, entire agreement, third party rights, the recovery of legal costs should a dispute arise and much more must also be considered to ensure that no potential problem is overlooked so that you may focus on your business goals free from the stress and distraction of having to navigate your through the minefield of litigation should a dispute arise.
Ts and Cs are a preventative measure that perhaps businesses do not want to spend time and money on as to do so will divert attention and resources. However, this is an area in which prevention is very much cheaper than the cure, and in all respects. It is not just the eye-watering levels of legal fees that you may be dealing with but also the loss of business should you find that the previously good and profitable relationship with your now opponent is beyond the reach of reconciliation.
Have a look at your terms to see whether they are appropriate and if they go far enough and are tailored to the needs of your business. If you are unsure, we can take a look, no obligation, and suggest amendments and mechanisms that can be put in place to minimise the risk of problems arising in the future.
Common clauses/issues that often need attention:
Penalty Clauses or estimate of loss
The courts do not like parties seeking to punish others, even if they have breached the contract. If the other party is in breach, any clause that purports to confer entitlement for you to recover more than you have lost as a result will be held a penalty and will be unenforceable. Check to see if your provisions go too far.
Governing Law and Jurisdiction
Subjecting your contracts and disputes to the laws and courts of England makes sense for business relationships based in this jurisdiction, but if you are contracting with overseas businesses? You may want to commence a claim in a different jurisdiction to facilitate enforcement of a judgment and it is important that your terms and conditions offer you the flexibility to do this if required.
Contractual right to recover legal fees
Did you know that if court action is not initiated and you manage to successfully settle the debt, there is no automatic right to recover your legal fees? However, it may be possible to successfully enforce the recovery of such expenses through carefully drafted terms and conditions. Similar provisions may be also be useful in the recovery of litigation costs.
Deposit or money on account
Why not ask for money upfront? The power in debt recovery lies with the person with the money. People often forget the time, stress and cost associated with actually recovering money. Remember that judgment is only a piece of paper; it is not uncommon to find that that the debtor has run out of money on trying to enforce.
For more information contact us…
0207 426 0382