Mon 27 Feb 2023

Legends and myths about Terms and Conditions

The legendary part is that a well-drafted set of Terms and Conditions (often call 'Ts & Cs') can protect your legal position, provide a form of insurance and give you certainty in your relationships with your customers. Who wouldn’t want to have a legally enforceable right to sue a customer who hadn't paid, or to repossess the goods supplied to them, or to pass responsibility to the buyer for insuring goods in transit (for example)?

Having legal clarity is obviously a good thing, but business owners often view the preparation of appropriate Ts & Cs as an unnecessary cost. As a result, we often come across certain dangerous myths about Ts & Cs, all of which need to be dispelled:

We don't need any Ts & Cs - we agree things by email or in person

Many business owners are happy to work on the basis of what has been agreed with their customers. Yes, in theory, oral contracts, or contracts formed in correspondence, can be as enforceable as a written contract.

However, a written set of Ts & Cs provides a clear record of what was agreed between you and your customer. Three years down the line, you can look back at the Ts & Cs and know immediately what the legal position is. By comparison, can you remember that conversation you had in 2020? Do you still have the email you sent containing the delivery schedule back in 2021? Good Ts & Cs avoid you having to dig through your emails or, worse, your memory.

We don't need bespoke Ts & Cs - this set I found on the internet will work

Perhaps even worse than not having a set of Ts & Cs is having the wrong set. Despite this, we regularly come across businesses which have 'borrowed' Ts & Cs from competitors, other businesses or even just a Google search. Apart from the possible breach of someone else's copyright, there are a number of problems with this approach, some of which we've come across include:

  • Ts & Cs which simply don't work for the business for which they are being used: you shouldn't sell software consultancy services using Ts & Cs that were intended for the online sale of office furniture (or vice versa);
  • references to the laws of another country, (typically one of the US states) which are, at best, meaningless and at worst, misleading;
  • mismatched clauses cannibalised from a variety of places, causing confusion and uncertainty; and
  • inclusion of meaningless clauses while missing out important ones.

Our lawyers should be able to draft a set of Ts & Cs off the top of their head

Before we can draft Ts & Cs for a client, we need to find out how the business operates. There's no point having a legally enforceable set of Ts & Cs which don't reflect what your business actually does. For example, a clause that says the customer will be invoiced on completion of the works is inappropriate if your procedure is actually to ask for payment in advance.

We need to have a good understanding of how your sales process works before we can put pen to paper, so be prepared to explain your business. As a side-benefit of this interrogation, we may be able to help you to tweak your processes to reduce business risk.

Whatever my Ts & Cs say, goes

It's important to remember that Ts & Cs can't exist in a vacuum. There'll be many laws and regulations which apply to your business and some of these will apply regardless of what your Ts & Cs say. When dealing with consumers, there's a wealth of consumer protection legislation which prevents you from limiting the consumer's rights. For instance, it's impossible to exclude your liability for personal injury or death caused by your negligence. All of this must be borne in mind when considering your Ts & Cs, which is why you need to get expert legal advice.

Paying a lawyer to draft Ts & Cs is just a waste of money

Think about Amazon. In 2022 Amazon enjoyed revenues exceeding US$513 billion. That's a staggering amount of money and there's no way Amazon would have tried to run even a small fraction of that business without that business being underpinned by a solid set of Ts & Cs to protect its interests. You may well point out that your business is nowhere near the size of Amazon's, but try to work out what proportion of your annual turnover is based on your existing Ts & Cs (or your 'lack of Ts & Cs'). Then ask yourself whether you should perhaps insure that turnover by having robust Ts & Cs. Even if your new Ts & Cs only allow you to sue successfully for one unpaid debt that would otherwise have been irrecoverable, they may have paid for themselves.

Now I've got my Ts & Cs drafted, I never need to review them again

While we always draft Ts & Cs so they last as long as possible, you need to keep them under review. It's all about making sure that you use Ts & Cs that reflect how your business works. If your business model has changed since the Ts & Cs were drafted, then some changes may be required. Using the earlier example, if you go from selling software consultancy services to selling office furniture online (or vice versa), your Ts & Cs will almost certainly need to be updated. Similarly, if there's a change of legislation, your Ts & Cs may need to be amended so they refer to the correct laws.

So how can Morton Fraser help?

We have a specialist team of lawyers who can provide not only Ts & Cs, but also a whole range of commercial contracts and policies. This list isn’t exhaustive, but we can provide you with website Ts & Cs, a privacy policy, a cookie policy, IP licence agreements, agency and distribution agreements, collaboration agreements, 'software as a service' (SaaS) agreements, confidentiality and non-disclosure agreements, all for a fixed price. In fact, we can help you to document pretty much any commercial arrangement that you might enter into in the course of your business. Whether you want to have a formal agreement is a commercial decision for you, but there's a lot more legal certainty and enforceability in a well-drafted contract than a handshake or an exchange of emails.

If you'd like to speak with us about Ts and Cs, please don't hesitate to contact a member of our corporate team.

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