It is not a coincidence that all large suppliers have in place written terms and conditions of sale to govern their customer contracts. Getting to that point of wanting these terms and conditions in place is a journey that often starts when businesses are smaller with a bad experience such as not getting paid. As businesses grow, attitudes to and awareness of risk change and terms and conditions of sale are one of the key tools to help to manage both legal and commercial risk in relation to customer contracts.

There is a legal distinction between dealing with business customers and consumers and this affects the content of the terms and conditions of sale (another blog for another day). This blog is in relation to terms and conditions of sale for business customers only:

1. Harmonises terms of business

Dealing with customers on the same terms across the board brings efficiencies in terms of contract handling and therefore the cost of sale. There is no need to re-invent the wheel every time. It is also part of a cohesive risk management strategy, where all legal and commercial risks have been thought through and dealt with in a proactive manner.

2. Improves supplier’s legal default position

In some instances, the law provides a default position that applies unless there is an agreement to the contrary. That default position won’t always suit the supplier and so terms and conditions over-write the default position for the supplier.

For example:
  • There is a default position that potentially makes suppliers liable for a wider range of losses of the customer if the supplier is in breach of contract etc. Terms and conditions of sale usually include provisions to reduce the impact of that default position.
  • There is a default position that makes a supplier of goods still responsible for damage to those goods, even if the customer hasn’t yet paid for them. Terms and conditions of sale therefore usually say that the customer takes the risk of the goods when they are “delivered” so that the customer is responsible for replacing damaged goods, even if the customer hasn’t yet paid for them.
3. Helps manage consequences of non-payment

If a customer does not pay, that does not give the supplier an automatic right to terminate (another blog for another day!). The right to suspend services and eventually terminate for late/ non-payment is critical. Without a clear contractual right to suspend or terminate, the supplier is in a precarious legal position, as it could find itself in breach of contract for wrongly suspending or terminating.

If you would like to discuss in further detail or have any questions about terms and conditions of sale, then get in touch with Tracey today: