Q&A -Terms and conditions should offer maximum protection for your business

25/11/2013

Q: I have recently taken over the running of the family company which manufactures and sells components for the farming industry. Having previously spent many years managing the manufacturing side of the business, I am unfamiliar with managing the sales side of the business. What issues should I be wary of as potential causes of contractual disputes?

A: The single most important piece of advice is: Ensure that your business has professionally drafted standard terms and conditions of sale and that these apply to the contracts with your customers.  Without such written terms, and reliable procedures for ensuring the terms apply, you may be left with an oral contract between you and your customers, where it will be your word against theirs as to what was agreed (although there may be some letters or emails which may be useful evidence).

An important further consideration if you are selling goods on credit is to ensure that your contract of sale specifies that your business owns the goods until the customer has paid in full (often called "retention of title" clauses). These provisions can help you to recover your goods if your customer becomes unable to pay.

The standard conditions of sale can limit or exclude the Company from certain liabilities. Whilst it is not possible to exclude your Company's liability for death or personal injury arising from your actions or negligence, it is possible to limit or exclude your liability for other losses, and well drafted terms should help to protect you from certain claims from your customers which may otherwise prove catastrophic.

Ensuring that your terms of business fit the needs of your business should minimize the risk to your business and the likelihood of disputes arising. Where such disputes are unavoidable, however, you should be well placed to protect the Company's interests by relying on the standard terms.