Another episode in the Q&A video series for SME’s and business leaders.
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Intro: I’m Stuart Ayling and in this episode of Vectis Q&A I’m speaking with commercial lawyer Helen Kay. Helen is Partner at Creevey Russell Lawyers and she’ll be explaining about terms and conditions for your business.
We’ll be looking at why terms and conditions are so important, why it’s much more than just mumbo-jumbo, and what you should do to have terms and conditions created for your business.
Stuart: Well I’m pleased to be back for this episode of Vectis Q&A with Helen Kay who is a commercial lawyer and Partner at Creevey Russell Lawyers. And Helen is passionate about helping business owners avoid unnecessary risks in commercial contracts. So thanks for being with me Helen.
Helen: Thanks for having me again Stuart. It’s a pleasure as always.
Stuart: Thank you. Now look, the topic for this particular episode is what do you need to have included in a well drafted set of terms & conditions. Now the phrase ‘terms and conditions’ I know turns most people off because that’s sort of the box they see on all these websites, or things they go to and that.
No one ever reads terms and conditions so explain to me why is this so important?
Helen: Business terms and conditions are basically your terms of trade so whatever your business says, this is the contract between you and your customers.
What we do is we work with our clients to draft terms and conditions that actually suit the way in which they do business. Because there’s no no one-size-fits-all business terms and conditions should be tailored to your business.
These are the really important terms that make sure that you get paid for the work that you’re doing, so they are very important Stuart.
Stuart: OK, so these are like critical aspects of as you say, they’re like the trading terms and conditions, so they’re not miscellaneous items. They’re really core to how the business does, or how a company does business.
Helen: Absolutely, like I said it is the contract between you and your customers. So they should be given to a customer before the customer makes the decision to purchase.
For example with your quote or the proposal that you’re giving the client. And most businesses do display their terms and conditions on their website so that when their customer first visits they know what the terms are, what are the payment terms, what’s the delivery terms, what warranties am I getting. What happens if I don’t pay. What happens if I’m not happy and I want a refund. All of these things should be in your terms and conditions and effectively could help the customers decision whether they buy from you or from somebody else.
Stuart: OK now I’ve often seen the situation where on an invoice, maybe on the the back side of an invoice for example, there will be terms and conditions listed there which cover the same sort of things as payment terms and other aspects that you were mentioning.
You mentioned that a customer for example should have access to these terms of trade before they make a decision. So what’s the best practice in terms of making that available?
Helen: Best practice Stuart is to have a number of failsafes, so I’ll provide these to my clients for example. I’ll give them a Word version. I’ll give them a PDF version. The PDF version should really be sent out with every proposal and quote. If you can’t actually merge it in with the proposal or quote you have as a Part 2. Making it very clear in your proposal and quote that the agreement between the parties encompasses this proposal and the attached terms and conditions.
And secondly it should really go on your website, as well as then going out on invoices. Because for example somebody rings me and says I’ve done all this work for a client I’ve designed them this fantastic website, it’s great they’re using it and now, they won’t pay me the final installment payment, which could be could be large on a big website for example.
The first thing I’ll say to them is send me the invoices and send me the contract the terms and conditions that you’ve got. Because it’s that that will guide me as to what was agreed between the parties.
Stuart: OK so that really, if things go wrong, these terms and conditions or terms of trade really form the the rules by which that dispute might be resolved.
Helen: Absolutely. There’s no set of rules for how to do business. There’s no if your client doesn’t pay you you’re entitled to engage a debt collector at their cost, charge them interest at certain rate. Those are not set out in legislation anywhere, they are set out in the contract that you enter into with your client or your suppliers.
Stuart: OK so that make sense. What you’re saying here is it a business should have a standard terms and conditions created which they can use in all different sorts of situations. What’s the, how should a company handle it if for example they’re creating proposals which might require different terms of trade.
Does it mean that a new terms and conditions document needs to be created for each proposal? How does a company work with that?
Helen: The best way to work with that is to have a standard set of terms and conditions. Just because you’ll have so many staff members trying to keep on top of making changes each time would be an administrative nightmare.
So what we do is we would mostly prepare these in two parts. So you have your almost blank proposal form as part 1 and then part 2 who is the all-ecompassing terms and conditions that don’t change.
What you do though is you have special conditions in the part 1 proposal and that’s where you could put in payment 60 days as opposed to may be the 14 days that’s in the terms of trade.
And you just make it very clear that where there are any special conditions that they prevail to the extent of any inconsistency with the general conditions. So that’s how it can be dealt with.
And training as well. Once these documents are prepared, with some of our larger clients I’ll actually go out and do some onsite training as to how to use them. So all their line level managers and the admin staff know how to use them.
Stuart: Yeah that’s really good to hear because even from what you were saying there it sounds like once people understand why those terms of trade are in place and how they can be flexible in terms of working around that that’s going to give them the confidence to be able to stick with them and to use them properly knowing that it’s not a big rigmarole each time they need to do something different.
Hey look, just before we close up this episode tell me something, if a business has terms and conditions or terms of trade already created what’s the difference between a well-drafted set of terms and conditions versus something that’s not so well drafted?
Helen: Very good question. You just need to look and see, are these working for what we’re doing on the ground now? So a clear definition of the products or services, actually accurate details of the payments terms. Warranty and guarantee information, now that needs to be kept up to date. There’s constant changes to our Australian Consumer Laws for example. Most recently this year they brought in new warranties that have to be displayed if you sell goods and services. I’ve written a blog on that if anyone’s interested.
And also things like refund policies just make sure that it’s all up to date. So it’s ‘well drafted’ in answer to your question, if it actually mirrors what you’re doing for that client and is up to date with legislation.
Stuart: OK excellent thanks for clearing that up Helen. I think we’ll wrap up this episode at this point. So Helen Kay from Creevey Russell Lawyers thanks again.
Helen: Thanks for having me again Stuart.