Why terms and conditions matter
Some businesses operate through the predominate use of verbal agreements with their customers. This is generally appropriate in small day to day matters (such as buying milk at the local corner store) however when a substantial amount of work or goods are to be provided, it is imperative that everything is in writing.
Terms and conditions should contain the salient points relevant to the goods and services you provide. This includes:
- How goods/services are to be supplied;
- How your terms are accepted;
- When and how payment must be made;
- What the consequence is for failing to pay on time; and
- Personal guarantees, retention of title, disclaimers, warranties and registration of security interests.
The above are just a few examples of the many important terms that should be covered in a Terms and Conditions document. These become crucial when a customer fails to pay an invoice or is dissatisfied with the goods/services provided, and the business owner needs to limit their liability or recover the debt.
A personal guarantee creates a second recourse against a customer in the event of default in payment. A guarantee is typically signed by a company director in the case of a company transaction, or another associated person. This makes the guarantor liable to pay for any unpaid monies owed by the customer.
Including disclaimers and warranties can also limit your liability for the goods or services supplied, as well as retention of title clauses, and security interest registration. Including retention of titles provisions and creating registered security interests ensures that any property intended to be sold by you remains yours until the final invoice is paid by the buyer, or until all monies owing are paid in the case of a loan. If there is a default in payment, you will be entitled to exercise certain rights over the property, such as requiring the goods to be returned. In the case of a company falling into liquidation before paying for the goods, security interest registration can ensure that the goods are not sold off as assets by the company.
Enforcing your rights becomes a much simpler and easier task when they have been reduced in writing, as it removes the ‘he said –she said’ side of a dispute. All parties are completely aware of their rights and obligations from the beginning of the matter and the potential for having to go through the process of a formal dispute is minimised.
How we can help
At Streten Mason Lawyers, we help business owners create airtight terms and conditions. We can draft Terms & Conditions documents for your business from scratch, or review and update your current document. Make sure you are properly covered and contact us.
Rhennen Ford – Solicitor