Orr Litchfield
Solicitors and Business Lawyers
Solicitors and Business Lawyers
If you are a business owner and you have your own legally drafted standard terms and conditions, naturally you would seek to enter contracts under your own terms and not the other party’s to reduce risk and liability to a foreseeable and reasonable level.
However, what if the other commercial party is a bigger player than you in the market sector that you are competing in and is offering a potentially lucrative contract?
Here are a few tips:
Disputes can arise where contracts are entered into on the basis of an exchange of a number of documents because it can be unclear as to whose terms apply, particularly where both parties have each insisted on using their own terms. A single signed contract which determines the applicable terms and conditions would be preferable.
This means the parties do not intend to be bound so beware of entering an informal agreement by beginning any preparatory work or effecting performance and delivery. Set out your intentions at least by letter or email using “subject to contract” headings until a formal contract has been signed.
Check for any definitions and related clauses that are not relevant to the contract or that are in conflict with a related document or internal policy, e.g. the meaning of “Services” or “Deliverables” must reflect your business policies. Otherwise, this can create ambiguity and uncertainty if you end up in a dispute with the other contracting party(ies).
Do not accept this drafting unless you are sure you can adhere to the time periods stipulated. You will be liable for contractual damages if you miss dates under this heading.
Be wary of this phrase as it is a higher threshold to reach than “reasonable endeavours.” Aim to qualify the words by scoping out what “best endeavours” actually mean.
For example: “any reschedule of works and corresponding price for the works shall be agreed between the parties.” Avoid such promises to agree future terms (even if in “good faith”). Instead, set out criteria or a mechanism for working out any new terms, or insist on entering a new signed contract.
Check whether the contract gives both parties a balanced right; if the contract causes a significant imbalance in your rights and obligations, do not sign it until you have obtained legal advice from a commercial law practitioner.
A definite no. Or, if feasible, negotiate appropriate insurance to cover your liability up to a specified amount.
Naturally, as your business grows, the range of risks and liabilities are likely to increase. Ensure you have policies in place to manage those risks – obtaining suitable insurance cover should be one of those policies.
Whether you would like terms and conditions of business for a new business or would like us to review your existing terms and conditions, we can help you to plan, prepare, review and implement your terms and conditions in a way that helps you to protect and develop your business.
If you would like more information about terms and conditions of business or any aspect of commercial law or would like to discuss your terms and conditions or a potential or existing commercial law matter, please email us at enquiries@orrlitchfield.com, complete an Enquiry Form or call us.
