Standard Terms and Conditions for Small Businesses: What Should be Included?
James Regan is a partner in our commercial department and can be contacted on 01323 434420 or by emailing james.regan@stephenrimmer.com
Introduction
The business landscape, especially for small businesses, can often seem like a minefield. The key to navigating this successfully lies in establishing comprehensive standard terms and conditions (T&Cs). These T&Cs act as a compass, guiding the business relationship between you and your customers. This article delves into the importance of T&Cs, their components, and how to craft and update them effectively.
What are Terms and Conditions?
T&Cs, also known as business terms, terms of sale, or terms of service, are the legal contract between you and your customer for your supply of goods or services. They are the conditions on which you agree to do business with someone else, often on a non-negotiable take-it-or-leave-it basis. In the UK, it is crucial for businesses to have T&Cs in place to protect both themselves and their customers.
The Importance of Terms and Conditions
T&Cs are vital in setting out what you have agreed with a client or presenting the inflexible terms under which you will accept business. They act as a record of your contract, define the contract, set out business procedures, protect your business and your rights and limit your liability. Even if you are selling a low-value product or service, a disagreement with a client can take up significant time and possibly lead to reputational damage. Hence, having a comprehensive set of T&Cs is not only good business practice but also a trust-building measure with customers.
Components of Terms and Conditions
A well-constructed T&Cs document should include the following provisions:
Definition of the Contract's Basis or Subject Matter
Your T&Cs should clearly state what you are selling. The products and/or services could be described in detail or by reference to another document, such as a sales brochure or your website.
The Price
This should include all variations and circumstances as well as provisions for price increase.
Payment Terms
This section should set out how you want to be paid and when, your contract should include non-payment and late payment provisions.
Definition of the Services Procedures
How much detail you should give depends on your business. Avoid cluttering your T&Cs with half promises and sales talk.
Provisions Relating to Carriage, Delivery, Risk and Insurance
Every business selling goods has its T&Cs to cover this area of activity.
What Happens While the Contract Runs?
In a contract for services which will take place over a period of time, you might want
to explain who will be responsible for which aspects of the service while the contract is
running.There can be any number of contract clauses depending on the nature of the
service to be delivered.
Termination Provisions
You need to consider how long your contract will last, the trigger for termination and the consequences of early termination.
Limitation of Liability
These terms limit the damages that you have to pay to your customer if your goods or services fail.
Protecting Your Business
This area is usually covered in a number of separate provisions.
Some such provisions might include force majeure (circumstances beyond your and the customer's control), confidentiality, or non-disclosure of information or restriction of the extent of any claim.
Intellectual Property Rights Protection
Your intellectual property may be very valuable. Use and ownership of intellectual property is particularly important in the context of an Internet business.
The Role of Privacy Policies
Privacy policies that outline how businesses collect, store, and use customer data are a crucial part of T&Cs. Businesses must comply with UK data protection laws, including the General Data Protection Regulation (GDPR) as present in UK law.
Compliance with UK Consumer Protection Laws
Businesses must adhere to UK consumer protection laws, including the Consumer Rights Act, which outlines the rights of consumers when purchasing goods or services. Any terms and conditions should be written in clear and concise language, and businesses should ensure that customers fully understand what they are agreeing to when making a purchase.
Crafting Your Terms and Conditions
Creating your terms and conditions can be done in several ways. It's often recommended to instruct a lawyer to draft them, as using templates and examples can result in key business activities not being protected by agreement to the terms and conditions. Regardless of the method used, businesses should ensure that their terms and conditions are tailored to their specific industry and customer base and are written in clear and concise language.
Updating Your Terms and Conditions
Once your terms and conditions are in place, it is important to regularly review and update them to ensure that they remain relevant and effective. Businesses should review their terms and conditions at least once a year or whenever there are changes to laws or regulations that may impact them. It is also important to notify customers of any changes to the terms and conditions, including providing them with a copy of the updated document.
Legally Binding Nature of Terms and Conditions
T&Cs are legally binding and form a part of the contract between you and your customer. To ensure they're enforceable, T&Cs should be made visible on your website and form part of your onboarding process when you take on a new client. It's best practice to direct all new customers to your T&Cs and have them sign the document to say they have read them, or create an online click agreement.
Where to Place Your Terms and Conditions
Position your T&Cs in a prominent place on your website and ensure they’re easily accessible through hyperlinks. If you require a sign-up form from new customers, acceptance of your website terms should be mandatory, and definitive acceptance of them sought, e.g. “click this button to accept our Terms and Conditions”.
Changing Your Business's Terms and Conditions
Most T&Cs include a provision that allows the business to change the Terms and Conditions at any time. If you have regular clients or customers, it's best to inform them in writing that your standard T&Cs have changed and what this means for them. To avoid any misunderstandings that may lead to disputes, have the client or customer sign the new T&Cs to acknowledge receipt.
Conclusion
Having effective terms and conditions in place is essential for any UK business. They provide a clear understanding of the terms of sale or service, protect the business and customers, and ensure compliance with UK laws and regulations. By following the key considerations outlined in this guide, businesses can create terms and conditions that are tailored to their specific needs and customer base and that provide a positive experience for their customers. If you're unsure about how to draft your terms and conditions or need help updating them, consider seeking legal advice. By taking the time to ensure that your terms and conditions are effective and up to date, you can protect your business and provide your customers with a positive experience.