Many people skip over the “small print” on the back of a contract, but it’s there for a reason. A well-drafted set of terms and conditions allow a seller of goods or provider of services to control many aspects of the transaction such as how payment is made, what happens if the payer defaults, and what liabilities the seller accepts if the goods are faulty. There are some industries where standard terms and conditions have been adopted-the JCT contract in the building trade for instance. It is possible to use a standard set of terms and conditions in other trades, but usually it is better for a trader has to draw up a set of terms that are tailored to suit their business. A straightforward set would cost in the region of £250 plus VAT.

As well as the terms themselves, there are a few other important matters that a well-advised trader needs to bear in mind:

Terms implied by law: if the trader is dealing with a “consumer” (either a member of the public, or in certain circumstances another business), there are statutes which imply terms into a contract and these cannot be excluded or modified. The most common of these terms are requirements that goods and services must be of satisfactory quality, and delivered in a reasonable time.

Reasonableness: exclusion clauses can be included into a contract which prevent or limit liability if, for instance, goods are faulty. If the contract is between two commercial organisations the law does not intervene to limit those clauses (unless one of them is a “consumer” – see above). However, if the consumer is a private individual the law requires that any exclusion clause must be “reasonable”, and if it is not, the law can intervene and strike out an offending clause. It is never possible to exclude liability for death or injury.

Notice: for terms and conditions to bind a contracting party, they must have notice of them before entering into the contract. Accordingly it is best to put the terms and conditions on the back of a quote for instance, with wording in the quote itself to the effect that entering ino the contract implies acceptance of the terms and conditions. If you are selling through a website, it is best to design the site so that a purchaser can only access the page where they place an order by “clicking through” the terms and conditions and accepting them.

This note is not intended to be a definitive guide to the law. For further information contact David Vaughan-Birch.

Terms and conditions of trading