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If you are a business that offers services, it may be tempting to make several promises to customers to attract business. However, you should be wary about the terms you include in your business contracts. Including terms you cannot honour in your contracts can have various negative implications for your business. This article will explore why you should be careful about selling your services in your contracts with business customers.
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What is a Contract?
A contract is a vital document that records the terms under which commercial parties will do business together. A robust contract can help your business in several ways, including:
- clearly setting out critical terms with the obligations of each of the parties, which can limit the chance of mismatched expectations;
- allowing you to enforce your legal rights if a customer fails to comply with their obligations; and
- helping you prevent disputes from occurring and managing any problems that arise by including a detailed dispute resolution procedure.
You must ensure that you draft your contracts carefully and tailor them to cover your business’ services. Your contracts should protect your business interests and include detailed information about the services that you will provide to avoid ambiguity.
Why Should You Be Careful About Selling Your Services in Your Contract?
Your business contracts (or terms and conditions) must be drafted carefully. You should carefully consider all the legal terms you include within them. While it may be tempting to include grand promises about your business in your contracts, you need to be cautious about the promises you make in the ‘fine print’.
For example, you might want to reconsider promises such as:
- replying to customer questions immediately; and
- making guarantees, such as guaranteeing that a customer will improve its media presence coverage in three months by working with your public relations company.
Here are some of the key reasons why you should be careful when making such promises in your contract:
1. Adverse Legal Action
You will be exposed to various risks when you sign contracts with your customers. If you fail to meet your contractual obligations in your commercial contract, your customers could:
- complain if they are unhappy with your services or fail to pay your invoices; and
- take legal action against your business for breach of contract, which can be extremely stressful, time-consuming and costly.
You must ensure that you can comply with all contractual obligations in your customer contracts. Therefore, you should be realistic in your contracts and be wary of making promises that you cannot keep. In particular, avoid ‘marketing talk’ or exaggerations about the services you will deliver.
2. Reputational Damage and Loss of Business
As well as legal risks, overselling your services in your contracts can lead to commercial problems. For example, your industry reputation could suffer if customers speak negatively about your business online.
Unhappy customers could make allegations about late delivery of your services if you have not honoured the speedy delivery dates set out in your contract. Overpromising and underdelivering could dissuade customers from working with you again, meaning you could lose potential repeat business and revenue.
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How Can Working with a Solicitor Help Avoid Such Risks?
Judging the difference between workable contractual commitments and marketing pitches may be challenging without legal knowledge. However, you should understand that contracts are legally binding documents that you must carefully draft.
If you are unsure about your service contracts and what terms they should include, working with an experienced commercial solicitor can help.
For example, a commercial solicitor can help you identify which terms you should include in your contract. A solicitor can also:
- advise on and draft clear contractual obligations that your business can commit to and comply with;
- guide you on any terms or promises that may be problematic, even if you have the best intentions with them;
- alert you to risky provisions, such as unfair contract terms or misleading contract terms, which could be open to challenge; and
- help you understand whether particular service levels should be separately negotiated with clients or included in your contract.
Key Takeaways
You must be careful when selling your services in your business contracts. Your contracts should only include obligations you are confident you will be able to comply with and deliver on. If you over-promise or fail to comply with the terms of your contract, this could lead to several negative implications. For example, your customers could complain that you breached your contract. As such, you should not take this risk and consider a cautious approach. If you are unsure which terms to include in your customer contracts, you can work with an experienced commercial solicitor who can offer sound legal advice.
If you need advice on a contract or how to draft your commercial agreements to protect your business interests, our experienced contract lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
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