Why Do You Need Terms and Conditions?
I’ve been asked this question several times over the years. Or it’s been said as a statement to me: I don’t need terms and conditions; I only work with people I trust, or all our customers are lovely.
Whether you are a start-up or an established business, now more than ever, a robust set of terms and conditions is essential to create the proper legal relationship between you and your customer.
They define how you are prepared to do business with someone else. Without them, you could find yourself conducting business on your customer’s Terms.
Whether you call them Terms and Conditions, Terms of Business, Terms of Sale or Business Terms, they form a legally binding contract with your customer if written well and agreed upon by both parties.
Even if you are paid upfront, it’s still essential to have a record of what you have agreed to. They are more than just payment terms.
So, why do you need written terms and conditions for your business?
Protect Your Business
Terms and Conditions protect your business from unnecessary risk, disruption to your cash flow, erosion of your profits and damage to your reputation.
Legal action is stressful, expensive and time-consuming. Good written Terms and Conditions reduces the risk of litigation and having to defend unclear contract terms.
A dispute over terms can damage your reputation even with low-value goods and services.
Set Clear Expectations
Terms and conditions help to set realistic expectations and align your customers’ expectations with your ability to deliver. Your customers can’t know what you can commit to if you don’t tell them. As a result, they may feel let down when you can’t meet their expectations.
They eliminate misunderstandings that could stall delivery or payment.
Ensure you are Compliant
There may be regulations specific to your industry that you should refer to in your terms and conditions.
If your customers are individuals, then Consumer Contract law will apply. There are areas you must cover in your terms, particularly if your customers buy from you over the phone, by email or online.
Give Customers Confidence
Terms and Conditions give your business a higher level of professionalism. Being transparent about how you do business results in increased customer confidence, satisfaction and trust in you and your business.
Being clear on critical terms in areas such as warranties and guarantees, delivery and returns will give your customer confidence when placing orders with you.
With a set of standard terms and conditions, you ensure you can consistently deliver good customer service.
Because there is no ambiguity, with no surprises, you can deliver on your promises.
If you need to flex your terms for a particular customer because of the relationship or risk, you can do this in a supplement to your standard terms.
There is much more to Terms and Conditions than price, delivery, and payment terms.
When creating your Terms and Conditions, think about what you sell, how you want to do business, who with (and the risk associated with that who), what you need for your cash flow and what might go wrong.
A good set should also protect your intellectual property, be clear on any warranties or guarantees, limit your liability for failure or delay because of events beyond your control and be clear on when ownership of goods passes to the customer. In addition, they outline the consequences of breach of contract, including non-payment.
If you’d like to explore how a good set of terms and conditions could benefit your business, why not book a call?