Category Archives: Preventative Measures

Contract Law and Terms of Business

Posted by diane.bantten

Contract Law – a recent case.

Azimut-Benetti SpA v Healey [2010]

A contract contrained a clause entitling a yacht building company to damages of 20% of the full contract price on the buyer’s default.  The buyer argued that the clause was a penalty clause and thus unenforceable.  The trial judge disagreed finding that the clause was commercially justifiable as providing a balance between the parties upon lawful termination.

This brings me neatly on to terms and conditions of business.  What do you do if you don’t have any?  You could :-

1. Write your own.

2. Download a template from the web.

3. Let your solicitor or lawyer have a go.

4. Copy some terms from a competitor.

5. Let Acquit write your terms.

Whichever option you choose should depend upon why you need business terms and conditions. Do you want some professional-looking text simply to look, well, professional? If so, then all you need to do is choose Option 2 i.e. download a cheap generic set of terms from the web.

If, however, your business will be offering goods or services on credit then you need a set of business terms suited for this purpose. This is because a great set has the ability to:

i) help prevent late payment by your customers or debtors. ii) give you real options in case of late payment or non-payment by your customers.

1. Write your own. If you have some legal training or higher education in commercial and contract law, then you could draft your own terms. But how long would it take you? And how can you be sure that you include everything important, especially from a credit management perspective?

2. Download a template from the web. If you are on a tight budget then this might be an option. But do you know who wrote the original terms and conditions template? Do they work in practice? How will they stand up in court if you need to enforce your rights? Who will create the additional clauses you’ll need for your particular business and industry? How much customisation is possible? And, again, how can you be sure that they include everything important, especially from a credit management perspective.

3. Let your local solicitor or lawyer have a go. Yes, they have the training. But in practice, how many sets of terms do they create for local businesses on a regular basis? One or two a month is usual because many solicitors are also busy focusing upon divorce, conveyancing, probate and litigation work. And the biggest question here is how much will a solicitor charge you for a fully bespoke set of terms and conditions?

4. Copy from a competitor. Whatever you do, don’t be tempted to copy a competitor’s terms and conditions. If you are caught, then there could be financial penalties and even worse, the negative publicity to suffer as a consequence.

Copied terms are rarely sufficient to protect the business fully. This deficiency is usually due to either lack of relevant credit management terms or the absence of clauses which address key legislation such as the Data Protection Act, Sale of Goods Act etc.

5. Ask Acquit Debt Recovery to create your business terms and conditions. We will fully-customise for you a set of terms and conditions that will be right for your business.

It is possible to word your terms so that your business can benefit financially from a free debt collection service and from massive improvements in your cash-flow.