Terms & Conditions
Terms and Conditions
Standard terms and conditions are suitable for goods and services which are very similar and sold under the same circumstances. Unique or tailored products or services will require unique terms for each transaction.
In writing?
Commercial contracts do not necessarily have to be in writing, although where possible there should be a properly drafted written agreement.
As a basic minimum, any agreement, whether for a generic or unique product or service, should make it clear as to what is exactly being agreed to, and naturally terms with regards to price, payment terms, delivery and, of course, goods and services themselves should be included in an agreement.
Limiting liability
If a business wishes to limit its liability it can do so by including terms with that effect so long as the terms can be considered reasonable. Negligence is treated as a matter that is separate from contract law. You cannot, for example, limit liability for any injury or death caused by negligence.
Liquidated damages
You may also want to include liquidated damages clauses. Liquidated damages clauses allow one party to be compensated for the other party’s breach of the contract.
Liquidated damages clauses are only valid where the breach is related to the term which forms an essential part of the contract and the compensation awarded is a ‘genuine pre-estimate of loss.’ If, for example, you agree to build a house for me and on completion I find the house is subsiding because the foundations have not been properly put in place, that would be a breach of an essential term of the contract.
Let’s say the kitchen for the house is a design other than the one we agreed to. Whilst I would certainly be able to claim some money back, it would be very difficult for me to say that is a breach of essential part of the contract.
Clauses which cannot be properly classed as liquidated damages clauses are called penalty clauses. Penalty clauses are invalid because they seek to punish the party in breach. Punishment is the reserve of the criminal law, not civil law of which contract law is a part.
Consumers
Consumers are given greater protection than businesses in pure B2B (business to business) transactions. As a general starting point, all the terms of the contract must be considered fair. If, for example, there is a term stipulating that any payments made in advance will be kept in the event of the contract lawfully coming to an end, then that will be considered an unfair term.
Consumer legislation will imply terms into contracts whether they are expressly referred to or not. The Sale of Goods Act is a major piece of legislation which stipulates that any goods sold will be ‘as described’, ‘fit for purpose’ and ‘of satisfactory quality’ whether there is an agreement or not.