By Mike Worsnop - 30 Mar 2011
Terms of Trade govern the way you do business with your
customers. They're critical in regulating your business
relationships. So you must get your terms of trade right and ensure
they are enforceable when required.
Introduce your Terms Before you Start
Ideally potential customers should have a chance to review your
terms before they begin trading with you. In practice, this often
doesn't happen. Terms may be buried in the least accessible part of
a business's website, or appear in barely decipherable print on the
reverse of invoices.
However, if your customers haven't seen or had a chance to read
your terms, they may provide little protection. Your customers can
try to argue that because they were not made aware of your terms,
they don't apply.
A good way to overcome this risk is to ask customers to sign and
return your terms before you do business together. Providing your
terms at the same time as a customer completes a request for credit
is one way of doing this. Other good options for making sure that
customers are at least aware that your terms exist include:
Common Frameworks for your Terms of Trade
All sorts of provisions can be included in your terms. Common
clauses include:
- Price and Payment
- Delivery
- Dispute resolution
- Retention of title/Security Interest
- Information and privacy
- Intellectual property
- Termination
- Warranties
- Cancellations
- Claims
Protect your Business by Keeping your Terms of Trade
Up-To-Date
Review your terms regularly to make sure they are up-to-date and
comply with the current law. Your terms should be a "living
document" and so be able to respond to the needs of your business.
Your terms shouldn't simply be done, ticked off and left to reside
at the bottom of your bottom drawer.
Check that you're making the most of protections you can have
under your terms and the law. For example, simply having a
retention of title clause in your terms won't guarantee that you
will retain ownership over goods which have been supplied to a
customer but not yet paid for. (You must also have the right to
register a security interest on the Personal Property Securities
Register).
Well drafted, appropriate and properly implemented terms of
trade provide a back bone to your business's sale of its goods and
services. They provide certainty around the contract to both seller
and purchaser.
If you'd like us to review your terms of trade or to prepare new
ones please contact Andrew Nicoll or your usual contact at
Martelli McKegg on 09 379 7333.