Once Bitten, Twice Shy

There is no getting away from the worldwide crisis that is currently sweeping our nation.

As a business owner it is more important than ever to remain focused and do what you can to protect your business that may have seen a massive decline in work over the last few weeks. With the Government’s support and schemes, hopefully you are seeing that there is light at the end of the tunnel and perhaps your business may one of the lucky ones who will prosper during this time, or be better off when it all “blows over”.

It will be… and it is always important to remember that.

So, what can you do in this time to ensure your business is in the best possible position when you do start trading again? There are lots you can do … my specialism however is supporting businesses just like yours with making sure you are contractually secure. With the right terms of business in place not only do you protect your business, but you also promote it too by showing your potential customers that you are professional and mean business.

Getting your terms and conditions drafted professionally is never a top priority when starting a business. Many may steal from competitors, the old company they worked for or use templated documents instead of getting their own documents professionally drafted. Just pulling off any old terms & conditions from a similar business is not going to protect you the way having them written tailored to your business will. Copying from a similar business is dangerous, you may not be able to rely on them in court, they could be illegal, and they may not have been written professionally in the first place. Plus, if you don’t understand them chances are your customers won’t!

The beginning of last year saw a company awarded a no-deal Brexit ferry contract worth £13.8m that, despite not having any ferries, also copied and pasted their terms from a pizza delivery company rather than delivery of goods across the English Channel. How embarrassing! Sadly, this is not an isolated incident, it just so happens that other businesses do not make headline news. However – would you buy from someone if that is what is presented to you? 

It is also a violation of copyright law to copy someone else’s work without permission and if you are taking your business seriously you really shouldn’t be breaching any laws.

Want to write them yourself or pay for a generic template?

As business owners you’ll be considering the more business-related terms like price, payment terms and delivery costs. What about limiting your liabilities? Protecting your intellectual property? Passing of title and risk? Cancellation and termination? Having a well drafted set of terms and conditions will fully protect your position should ANY problems arise. Think WORST CASE SCENARIO! Who would be your most awkward customers and consider how you would respond to that?

I’ve also seen some terms & conditions that are not legally compliant and therefore not enforceable. Depending on who your customers are – whether business or consumers – will reflect what law will apply. Of course, not being legal will have a real negative effect on any business relationship you may have. Every business should have a standard set of terms that they use for each transaction, if they are written correctly they are written with your business in mind. The way your business operates from start to finish must be considered.

  • No two businesses are the same!
  • the sales process
  • the way you invoice
  • the term of the contract
  • what is expected from the other party

I often hear that businesses are concerned about ‘scaring customers off’ with terms and conditions. It is actually quite the opposite; having a clear, direct and understandable document attached with any proposal will show you in a professional light not a daunting one. They should be clear and easy to understand and of course make sense. If you have copied them from another business and you don’t understand them, how do you expect your customers to?

Being transparent with how you work and your business processes promotes customer confidence. It reduces the likelihood of long-winded drawn out arguments about what was promised during the negotiation and sales process. You must also stipulate what your customers obligations are – remember they can be in breach too. If you do not state these this in your terms and conditions you put yourself at risk of uncertainty, misunderstandings and the inability to be able to complete your side of the contract.

When no terms have been applied to the contract, or ineffective terms have been used many problems can arise. Below I consider what are the absolute minimum terms that must be included.

Parties

Seems obvious but be 100% clear on who you are contracting with and whether that individual has the capacity to enter into contracts on behalf of the company. Always ensure you have full details of the company too, chasing payment without an address would be very difficult.

Term

How long is this contract for? Is it rolling? What happens at the end of the minimum term? It is in your best interests to make this very very clear so you can plan for business growth with client retention.

Payment

  • Be clear on the price, be clear on what is included in that price.
  • Be clear on when payment is due, payable on invoice? Or by standing order? GoCardless?
  • Late payment is unfortunately a fact of life for small businesses, as there is often no urgency from your customers to pay you. With the right terms in place, you can ensure that you get paid first with no excuses for slow payment. Furthermore, there is no question over the work that has been completed and whether the money is due at all as the terms consolidate everything that has been agreed.

Limitation of Liability

All contracts, in particular business to business contracts, carry a risk of liability. Legal liability can arise from breach of contract, negligence, misrepresentation and infringement of IP rights.  A limitation of liability clause is essential as it serves to limit the amount and types of compensation one party can recover from the other party should any of these things occur. If you do not cap the amount of your monetary liability you have to customers, you could be liable for an unlimited amount which could wipe out your whole business. You also want to think about what you are warranting when delivering your product or service.  If you are building a website, do you warrant that the website will make that business money?

Will those words you are writing as a copywriter win huge contracts? You’d be surprised at what the other party may try when disputing an invoice.

Amendments and variations

Now this is a biggy. The amount of money that is lost in businesses because this is not considered or made clear is insane. Whether your business provides a service or a product it can often change as the relationship progresses and can be very different from what was originally quoted. It is down to you to put those boundaries in place, if you originally quoted 10 hours but the job has become more like 12 hours, charge for that. Rely on your terms and ensure you are being paid for ALL the work you have done and not just what you have quoted for.

Alternative Dispute Resolution

If disputes do arise, it is important to be clear in your terms what the processes are. Disputes can then be dealt with much quicker, and cheaper than going through the court. Furthermore, many clients will come to us once something bad has happened. Anything from £100 – £1000s worth of revenue lost and with little or no backing with no terms and conditions it makes it more difficult to recover those costs. A lawyer can present your case much simpler if the contract is clear which means less money spent on dispute resolution.

Cancellation and Termination

What is your cancellation policy? Once a deposit has been paid, what refunds will you give? Depending on your industry and who your clients are will alter this clause. It needs to be clear what your processes are in response to anyone wishing to cancel. What notice do you require should it be for retained services? 30 days, maybe 60? You decide.

Many customers will contact me because they have lost a huge client unexpectedly, no terms suggest they can’t do otherwise and this is the difference between paying the mortgage that month or not with no time to market and replace that client. Consider all possibilities and be protected from them.

Know the Law

This is obviously dependent on your industry. If you are selling to consumers you must be compliant with consumer law, there are different things to consider here. Cooling off periods for example and contract terms must be less harsh. Different industries also have different regulations you must adhere to, your terms must be clear on what these are and not be outdated.

Ensure They are Applicable to the Contract

Just placing these terms and conditions on your website or even worse in your top drawer will not be effective as they have not been properly incorporated into the contract. Always expressly state in pre-contractual communications that your business’ standard terms will apply.

Put some time and effort into understanding your own terms and conditions. Be sure they work for your business and should your business processes change then so should your terms.

1. If one clause is poorly drafted it could invalidate your entire agreement.

This is the business equivalent of thinking you had house insurance and finding out after your house has burnt to the ground that, in fact, you had an expired policy. Cutting corners now, and not paying full attention could cost you immensely. Terms and conditions are like an insurance policy. 

2. Your business is unique, so why have the same Terms as anyone else?

Drafting Terms that align with your mission and values in straightforward language is yet another way to distinguish your company in the marketplace to win and retain customers.

3. It could be the difference between winning that huge contract or not.

You assume no one reads terms and conditions but if a client is choosing between you or a competitor, it wouldn’t be unusual to compare you both in this way. If you are selling computers but your terms look like you are selling rabbits, or they are unfair or unclear. Who is likely to win the contract?

4. Time doesn’t stand still.

The terms you are considering copying could be out of date and not compliant with the most recent laws and regulations in your industry. Laws change all the time, and by ignoring this you could leave out crucial protections.

5. Beware of copying.

Even if you are copying a very similar set of terms, you may not understand them yourself completely and they won’t be fully protecting you in the way they should.

Also note copyright point above.

 

By Kerry Gibbs

There is no getting away from the worldwide crisis that is currently sweeping our nation.

As a business owner it is more important than ever to remain focused and do what you can to protect your business that may have seen a massive decline in work over the last few weeks. With the Government’s support and schemes, hopefully you are seeing that there is light at the end of the tunnel and perhaps your business may one of the lucky ones who will prosper during this time, or be better off when it all “blows over”.

It will be… and it is always important to remember that.

So, what can you do in this time to ensure your business is in the best possible position when you do start trading again? There are lots you can do … my specialism however is supporting businesses just like yours with making sure you are contractually secure. With the right terms of business in place not only do you protect your business, but you also promote it too by showing your potential customers that you are professional and mean business.

Getting your terms and conditions drafted professionally is never a top priority when starting a business. Many may steal from competitors, the old company they worked for or use templated documents instead of getting their own documents professionally drafted. Just pulling off any old terms & conditions from a similar business is not going to protect you the way having them written tailored to your business will. Copying from a similar business is dangerous, you may not be able to rely on them in court, they could be illegal, and they may not have been written professionally in the first place. Plus, if you don’t understand them chances are your customers won’t!

The beginning of last year saw a company awarded a no-deal Brexit ferry contract worth £13.8m that, despite not having any ferries, also copied and pasted their terms from a pizza delivery company rather than delivery of goods across the English Channel. How embarrassing! Sadly, this is not an isolated incident, it just so happens that other businesses do not make headline news. However – would you buy from someone if that is what is presented to you? 

It is also a violation of copyright law to copy someone else’s work without permission and if you are taking your business seriously you really shouldn’t be breaching any laws.

Want to write them yourself or pay for a generic template?

As business owners you’ll be considering the more business-related terms like price, payment terms and delivery costs. What about limiting your liabilities? Protecting your intellectual property? Passing of title and risk? Cancellation and termination? Having a well drafted set of terms and conditions will fully protect your position should ANY problems arise. Think WORST CASE SCENARIO! Who would be your most awkward customers and consider how you would respond to that?

I’ve also seen some terms & conditions that are not legally compliant and therefore not enforceable. Depending on who your customers are – whether business or consumers – will reflect what law will apply. Of course, not being legal will have a real negative effect on any business relationship you may have. Every business should have a standard set of terms that they use for each transaction, if they are written correctly they are written with your business in mind. The way your business operates from start to finish must be considered.

  1. No two businesses are the same!
  2. the sales process
  3. the way you invoice
  4. the term of the contract
  5. what is expected from the other party

 

I often hear that businesses are concerned about ‘scaring customers off’ with terms and conditions. It is actually quite the opposite; having a clear, direct and understandable document attached with any proposal will show you in a professional light not a daunting one. They should be clear and easy to understand and of course make sense. If you have copied them from another business and you don’t understand them, how do you expect your customers to?

Being transparent with how you work and your business processes promotes customer confidence. It reduces the likelihood of long-winded drawn out arguments about what was promised during the negotiation and sales process. You must also stipulate what your customers obligations are – remember they can be in breach too. If you do not state these this in your terms and conditions you put yourself at risk of uncertainty, misunderstandings and the inability to be able to complete your side of the contract.

When no terms have been applied to the contract, or ineffective terms have been used many problems can arise. Below I consider what are the absolute minimum terms that must be included.

Parties

Seems obvious but be 100% clear on who you are contracting with and whether that individual has the capacity to enter into contracts on behalf of the company. Always ensure you have full details of the company too, chasing payment without an address would be very difficult.

Term

How long is this contract for? Is it rolling? What happens at the end of the minimum term? It is in your best interests to make this very very clear so you can plan for business growth with client retention.

Payment

  1. Be clear on the price, be clear on what is included in that price.
  2. Be clear on when payment is due, payable on invoice? Or by standing order? GoCardless?
  3. Late payment is unfortunately a fact of life for small businesses, as there is often no urgency from your customers to pay you. With the right terms in place, you can ensure that you get paid first with no excuses for slow payment. Furthermore, there is no question over the work that has been completed and whether the money is due at all as the terms consolidate everything that has been agreed.

 

Limitation of Liability

All contracts, in particular business to business contracts, carry a risk of liability. Legal liability can arise from breach of contract, negligence, misrepresentation and infringement of IP rights.  A limitation of liability clause is essential as it serves to limit the amount and types of compensation one party can recover from the other party should any of these things occur. If you do not cap the amount of your monetary liability you have to customers, you could be liable for an unlimited amount which could wipe out your whole business. You also want to think about what you are warranting when delivering your product or service.  If you are building a website, do you warrant that the website will make that business money?

Will those words you are writing as a copywriter win huge contracts? You’d be surprised at what the other party may try when disputing an invoice.

Amendments and variations

Now this is a biggy. The amount of money that is lost in businesses because this is not considered or made clear is insane. Whether your business provides a service or a product it can often change as the relationship progresses and can be very different from what was originally quoted. It is down to you to put those boundaries in place, if you originally quoted 10 hours but the job has become more like 12 hours, charge for that. Rely on your terms and ensure you are being paid for ALL the work you have done and not just what you have quoted for.

Alternative Dispute Resolution

If disputes do arise, it is important to be clear in your terms what the processes are. Disputes can then be dealt with much quicker, and cheaper than going through the court. Furthermore, many clients will come to us once something bad has happened. Anything from £100 – £1000s worth of revenue lost and with little or no backing with no terms and conditions it makes it more difficult to recover those costs. A lawyer can present your case much simpler if the contract is clear which means less money spent on dispute resolution.

Cancellation and Termination

What is your cancellation policy? Once a deposit has been paid, what refunds will you give? Depending on your industry and who your clients are will alter this clause. It needs to be clear what your processes are in response to anyone wishing to cancel. What notice do you require should it be for retained services? 30 days, maybe 60? You decide.

Many customers will contact me because they have lost a huge client unexpectedly, no terms suggest they can’t do otherwise and this is the difference between paying the mortgage that month or not with no time to market and replace that client. Consider all possibilities and be protected from them.

Know the Law

This is obviously dependent on your industry. If you are selling to consumers you must be compliant with consumer law, there are different things to consider here. Cooling off periods for example and contract terms must be less harsh. Different industries also have different regulations you must adhere to, your terms must be clear on what these are and not be outdated.

Ensure They are Applicable to the Contract

Just placing these terms and conditions on your website or even worse in your top drawer will not be effective as they have not been properly incorporated into the contract. Always expressly state in pre-contractual communications that your business’ standard terms will apply.

Put some time and effort into understanding your own terms and conditions. Be sure they work for your business and should your business processes change then so should your terms.

1. If one clause is poorly drafted it could invalidate your entire agreement.

This is the business equivalent of thinking you had house insurance and finding out after your house has burnt to the ground that, in fact, you had an expired policy. Cutting corners now, and not paying full attention could cost you immensely. Terms and conditions are like an insurance policy. 

2. Your business is unique, so why have the same Terms as anyone else?

Drafting Terms that align with your mission and values in straightforward language is yet another way to distinguish your company in the marketplace to win and retain customers.

3. It could be the difference between winning that huge contract or not.

You assume no one reads terms and conditions but if a client is choosing between you or a competitor, it wouldn’t be unusual to compare you both in this way. If you are selling computers but your terms look like you are selling rabbits, or they are unfair or unclear. Who is likely to win the contract?

4. Time doesn’t stand still.

The terms you are considering copying could be out of date and not compliant with the most recent laws and regulations in your industry. Laws change all the time, and by ignoring this you could leave out crucial protections.

5. Beware of copying.

Even if you are copying a very similar set of terms, you may not understand them yourself completely and they won’t be fully protecting you in the way they should.

Also note copyright point above.

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