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What to include in your terms and conditions

09/06/2015 / Comments 0

5 tips for effective terms and conditions

Sometimes in business things go wrong. It’s inevitable. But, there are ways to protect your business so that, in the event something untoward happens, your business remains in a strong position.

One of the best ways to safeguard your business is to make sure you and your client are on the same page from the beginning. This can be achieved through effective terms and conditions.

By clearly stating what you expect from the client and what they can expect from you from the outset, you are setting expectations that could help to limit disputes and avoid any potential surprises in the future.

Plus, in the event something does go wrong, by having your terms in writing you have solid evidence that you can produce in court if needed.

All businesses are different and, as such, will require slightly different elements in their terms and conditions. But as a rough guide here are 12 questions you should consider answering in your T&Cs:

1. What is being provided?

It seems obvious but don’t underestimate how important it is to provide a clear definition of what product and services will be provided.

2. How much will it cost?

Clearly state your price and billing structure. This should include your rates and whether you charge by the hour or by the project. Try to include all potential charges so there is less room for dispute further down the line.

3. What is the expected project timeline?

Always indicate the length of the contract. This is particularly important if you are providing a service over a period of time. Set out timelines for delivery and queries and always state if you have any flexibility in the timescales for delivering the product or service. You may want to set appropriate hours for when clients can contact you to avoid frustration if you aren’t able to respond to requests out of hours.

4. When is payment due?

There’s little point telling your customers how much they need to pay if you forget to define when it needs to be paid by. So make sure you clearly state your payment terms.

5. What happens in the event of late payment?

Late payment can be crippling so make sure any late fees and/or interest rates for late payments are spelled out from the offset. This will give your customers incentive to pay their invoices sooner rather than later.

6. Do you offer guarantees or warrantees?

Setting out warranties and guarantees on what you are prepared to give about products or services can be an attractive selling point. However, be careful as this will give the customer the contractual right to sue if you breach the warranty.

7. Which law governs the contract?

Always include an applicable law clause which indicates which law governs the contract. For example, ‘This contract shall be governed by and construed in accordance with the laws of England’.

8. How and when can the contract be terminated?

A customer cancelling an order after you’ve already bought supplies can be damaging to your cash flow. So your T&Cs should set out the circumstances in which you and/or your customer can terminate the contract. Specify exactly what happens in the event either party doesn’t deliver, pay or wants to end the relationship. Also, you may want to include a Force Majeure clause to cover you when it is not possible to provide the products or services and it is not your fault. For example, if there is a natural disaster or civil unrest.

9. What do you do with customer data?

It’s important that your customer knows exactly what you are going to do with their data for data protection purposes. You could refer to your privacy policy if you have one.

10. How do you deal with sensitive information?

If your business deals with commercially sensitive information you should protect this confidential information by including a confidentiality clause. This should identify the information and explain when, and in what circumstances it can be disclosed.

11. Who owns the completed work?

If the contract is for the creation of a product, it’s worth establishing who owns the completed work. This is particularly important if you want the rights to use the work in your portfolio or if your client may use or modify the final product.

12. What if something goes wrong?

Always prepare for the worst! In the event something goes wrong your customer will want to know what protection they have. Establish this by including your level of liability or responsibility in your T&Cs. Explain what you will and will not accept responsibility for and when your customer should raise any problems they have. This could help stop disputes being raised when invoices are due.

Note: This blog acts as a guide only. All businesses are different so we recommend you consult an expert to ensure that your terms and conditions are as effective as possible and maximise the protection for your business.

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