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Where a business is supplying products or services, its contractual documentation is critical. For business owners, an important way to protect your business is by having a robust order form. This order form will set out the details of the products or services you will deliver under your commercial contract. An order form can help set out key information. For instance, your order form can set out the order details and pricing information for your products or services. This article will explore how having an order form can help to protect your business.
Why Are Contracts Important?
A business contract is a vital legal document for your business. Well-drafted contracts consider legal risks that you and your business are likely to face. These contracts aim to protect you when things go wrong. Contracts for your business must reflect the unique nature of the products or services you offer to your clients or customers. It is best practice that you update your business contracts as your business changes. If you do not use a robust written contract when trading, you are exposing your business to high risk.
To ensure your contract fully protects your business, it is a good idea to work with an experienced lawyer. This lawyer can draft a contract that addresses the key legal risks your business faces. Further, this lawyer can bring to your attention legal issues that may arise. Subsequently, this lawyer can include provisions in your business contracts to protect you from these risks.
What is an Order Form?
A contract needs to be very specific. Likewise, a contract needs to clearly set out what the supplier is agreeing to deliver to the customer. Using an ‘order form’ can help achieve this. Some businesses also use a ‘Scope of Work’, ‘Contract Details’, ‘Services Schedule’ or ‘Specification of Services’ document. These documents are quite similar to an order form. Essentially, the purpose of this is to document the precise details of what products or services a supplier will deliver. This is often more bespoke than the general legal contract terms and sets out the commercial terms around what the supplier is delivering.
For example, an order form (or similar document) will typically set out relevant information including:
- a full description of the products or services to be supplied, with sufficient detail to be clear on exactly what will and what will not be provided;
- commercial and technical details, such as where the services will be provided or where the products will be delivered and key deliverables under the contract;
- specific timeframes for delivery, including milestone dates;
- details of key parties involved in the services, including project managers from each party and their contact information;
- information about the charges payable for the services – i.e. the cost for the products or services; and
- any specific agreed service levels.
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Incorporating an Order Form into Your Commercial Agreement
When you use an order form (or similar document) as part of your commercial agreement, you will need to ensure it is properly incorporated into your agreement with your customer. This can be complex in practice. For example, some suppliers ask customers to sign an order form, incorporating their standard terms and conditions. In this case, you will need to ensure that your terms and conditions are properly incorporated into your contract.
Some businesses also incorporate a Schedule of Services into their commercial agreement rather than asking customers to sign an order form. As such, you should take legal advice on your contractual documentation as a whole and how it should be executed by the parties to ensure that your order form is legally binding.
How Can an Order Form Protect My Business?
1) Clarity of Contractual Obligations and Prevention of Misaligned Expectations
Ambiguities in contracts often lead to problems and disagreements. In particular, mismatched customer expectations are a common cause of disputes. However, using an order form can document clear contractual obligations of the supplier.
Using an order form can help you manage customer expectations. It sets out a record of your specific project and ensures that both parties to a contract can see and refer to what they have agreed. As such, an order form offers clarity around the key contract terms and customer requests.
As a supplier, you can use your order form to explain what you are agreeing to provide and carve out what is not included under the contract. For example, if certain services are excluded from your contract, you can explicitly state this in your order form.
An order form is often a short form, stand-alone part of the contract, which the parties can quickly and easily refer to see the key terms of a commercial deal.
Clearly documenting the commercial contract terms in an order form will mean there is less room for argument and misunderstandings between the parties.
2) Improved Customer Relations & More Streamlined Negotiations
Every commercial project you enter into will be different and the customer requests will differ from project to project.
If there is anything particularly bespoke that your customer requests, you can set it out in an order form with ease.
Whilst you may have a standard set of terms and conditions that apply to all customers, your order form offers the opportunity to document any niche terms arising from commercial negotiations.
The order form is where you can set out specific and bespoke details around the customer’s expectations and order details. For example, any niche requirements or performance measures required by the customer (such as target levels of service).
By using an order form (or similar document), your business will have a simple and flexible way to document customer requirements and finalise contracts, which could save time and money when negotiating new contracts. For small businesses, this can be particularly helpful.
Download this free Commercial Contracts Checklist to ensure your contracts will meet your business’ needs.
Key Takeaways
A contract is a key document for every business and using an order form can protect your business in various ways. For example, an order form can be used to clearly set out contractual obligations to help avoid mismatched expectations, which could otherwise lead to customer complaints. Businesses should take legal advice before using an order form (or similar document) to ensure that it is properly incorporated into their customer contract and legally binding.
If you need help drafting a business contract or order form, contact our experienced contract lawyers 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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