Introduction / Understand the Importance of Incorporation / Bring Attention to Your Terms and Conditions / Ensuring Incorporation for Suppliers / Ensuring Incorporation for email / telephone Orders / The Importance of Order Acknowledgments / Ensuring Incorporation for Customers / Avoiding the Battle of the Forms / Conclusion
In the world of business transactions, standard terms and conditions play a crucial role in defining the basis of a contract.
However, simply having terms and conditions in place is not enough. It is essential to ensure that these terms and conditions are properly incorporated into the contract to protect your business interests.
This article provides you with a checklist to help you effectively incorporate your standard terms and conditions into your transactions.
Understand the Importance of Incorporation:
Standard terms and conditions are not automatically considered a contract. They form the foundation of a contract and cover important aspects such as the parties involved, contract duration, goods/services purchased, and pricing.
Failing to incorporate your terms and conditions may result in accepting the other party's terms, which could be unfavourable and burdensome.
Bring Attention to Your Terms and Conditions:
To ensure proper incorporation, it is crucial to bring your terms and conditions to the other party's attention before the contract is made. Here are some effective ways to achieve this:
a. On Documentation: If your terms and conditions are printed on the back of a document, clearly state on the front that your terms and conditions of contract are set out overleaf. This applies to request for quotation, purchase order forms, catalogues, sales order forms, and order acknowledgement forms.
b. On Your Premises: If you sell goods at your premises, make your terms and conditions available at the point of sale. This is commonly seen in high-street shops where returns policies are displayed near the till.
c. On Your Website: Ensure that your terms and conditions are easily accessible on your company website. If customers can place orders on your website, provide them with the opportunity to read, print, and accept your terms and conditions before making payment.
d. By Email: When corresponding with customers or suppliers via email, attach your terms and conditions and clearly refer to them in the body of the email.
e. Keep a Record: Maintain a record of all documentation and correspondence where you have referred to your terms and conditions. This will help support any future debates regarding which party's terms and conditions govern the contract.
f. Training: Educate your sales team about the importance of properly incorporating terms and conditions. Establish clear policies and procedures, ensure compliance, and provide regular training to keep them updated.
Ensuring Incorporation for Suppliers:
If you receive orders from customers via email, it is essential to ensure that your terms and conditions are incorporated into the contract. Here's how:
a. Attach Terms and Conditions: Make sure your terms and conditions are attached to emails acknowledging orders. Clearly state in the email that the attached terms and conditions apply to the sale of goods/services.
b. Website Reference: Alternatively, you can refer to the terms and conditions displayed on your website. Clearly state in your email that the sale is subject to your terms and conditions located on your website. Provide a hyperlink for easy access and keep a record of any updates made to the terms and conditions.
Ensuring Incorporation for email / telephone Orders:
If you receive orders via fax or over the telephone, follow these steps to ensure incorporation:
a. Telephone Orders: Inform the customer that your terms and conditions will apply to the sale. Check if they have a copy, and if not, send one to them. Keep a record of the conversation for future reference.
b. Email (Fax) Orders: Send a legible copy of your terms and conditions with any order acknowledgment or quotations sent via email (or fax). Clearly refer to your terms and conditions on the order and state that any contract will be subject to them.
The Importance of Order Acknowledgments:
While order acknowledgments are not mandatory, they can provide additional protection. If you choose not to send order acknowledgments, ensure that you have provided your customer with a copy of your terms and conditions before the contract is made. The document detailing the sale should prominently state that your terms and conditions apply.
Ensuring Incorporation for Customers:
If you place orders with suppliers via email, fax, or telephone, follow these steps to ensure your terms and conditions are incorporated:
a. Email Orders: Attach your terms and conditions to the email and clearly refer to them on your order. State that any contract will be subject to your terms and conditions. Additionally, prominently display your terms and conditions on your website.
b. Email/Fax/Telephone Orders: When placing orders via email, fax or telephone, inform the supplier that your terms and conditions will apply to the purchase. Check if they have a copy, and if not, send one to them. Keep a record of the conversation for future reference.
Avoiding the Battle of the Forms:
The battle of the forms occurs when both the supplier and customer attempt to impose their own terms and conditions on the contract. To avoid this situation:
a. Read Correspondence: Carefully read the documents received from the other party. If they reference their own terms and conditions, immediately notify them in writing that you do not accept their terms and conditions. Clearly state that the sale and purchase will be concluded based on your terms and conditions.
b. Do Not Act Under Unaccepted Conditions: Avoid acting under an order until the terms and conditions are agreed upon. Conducting business based on the last correspondence before delivery or provision of services may imply acceptance of the other party's conditions.
c. Regular Communication: For new customers, provide them with a copy of your terms and conditions and request acknowledgment and agreement. For existing customers, consider sending a copy of your terms and conditions annually as a reminder.
d. Sales Team Training: Train your sales team to understand the importance of avoiding the other party's terms and conditions. Equip them with the knowledge to identify and reject such conditions.
Effectively incorporating standard terms and conditions into your business transactions is crucial for protecting your interests.
By following this checklist, you can ensure that your terms and conditions are properly incorporated, reducing the risk of unfavourable contractual obligations.
Remember, clear communication, proper documentation, and regular training are key to successful incorporation.
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Note: This publication does not necessarily deal with every important topic nor cover every aspect of the topics with which it deals. It is not designed to provide legal or other advice. The information contained in this document is intended to be for informational purposes and general interest only.
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