Why should I have Terms and Conditions of Business?

Limiting Liability for Personal Injury, Breach of Contract and so on

This provision allows the business to limit its liability in relation to certain issues such as personal injury, breach of contract, breach of statutory duty, loss of profit, indirect or consequential loss in connection with contract between the business and the customer. You can also put a cap on the liability in terms of a monetary sum. This is the most important provision from a business point of view as it limits liability outside of issues such as gross negligence or fraud perpetrated by the business.

Protecting your Intellectual Property

It is important that in your Terms and Conditions of Business that it is clear that the intellectual property of the business remains its intellectual property and the customer protects the business against any intellectual property infringement suffered as a result of the misuse of the business’ intellectual property in the course of their dealings.

Payment- Collecting Monies Owed

It is important that there is a clause which outlines the charges and payments of the business so there can be no disputing this. Another item that would be included here is the interest rate for late payment.

Selling Goods: Title and Risk

There should also be a provision which outlines that in the case of goods that title in goods shall only pass to the customer on receipt of payment in full and not on completion of delivery. The responsibility/risk for the goods should be detailed in that the risk in the goods passes on the basis of a specific time and event ie delivery at a certain place and time so that insurance policies can reflect the correct commercial sense between the parties.

Order Forms

It should be clear from the Terms and Conditions that the order form is part of the contract that specifies the exact quantity and specification of what is required from the business and what the customer exactly has requested. The Terms and Conditions is a good place to deal with the issue of order forms.

Termination

It is important to deal with the issue of termination of the contract between the parties and how that is to work and what the logistics are around the return of goods etc.

Assignment

It is important to deal with the issue of assignment in contracts whereby if either the business or the customer is sold or assigned. A situation where the customer is entitled to assign its interest would be a weak position for the business and the assignment provision must specifically state that the company must give its prior written consent before a customer can assign its rights under the contract. If a contract is silent, it is assumed that either party may assign its interest at any time.

Force Majeure

Another issue is what is known as a “force majeure event” whereby an event of happens that is beyond the reasonable control of the parties ie a flood, a fire, a war etc. It is important that the business outlines in its Terms and Conditions that it will not be liable to the customer as a result of a delay in its order or failure of the business to perform its obligations under the contract. It also allows for a situation whereby if the force majeure event persists for a period of time then the contract can be terminated.

Irish Law

It is important also that if you are dealing with a foreign customer as a business that the jurisdiction clause clearly states that the contract is in Ireland so that you can pursue the customer under the Irish Courts for non payment or breach of contract.

Suppliers

It is also advisable that as well as having Terms and Conditions for your business’ interactions with customers, you also have Terms and Conditions that govern your relationships with your business’ suppliers. The items outlined in this article are covered in such Terms and Conditions but are specifically tailored to the relationship with suppliers.