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If your business supplies goods, it is likely that you use standard supplier agreements. After all, there are several benefits to a supplier using standard terms and conditions to protect their business. Namely, using standard terms and conditions can save time and money and reduce risk. However, sometimes it is necessary to draft more bespoke terms to suit the supply arrangement. This article will explore how standard terms and conditions can protect your business as a supplier of products or services.
Why Are Terms and Conditions Important in Supplier Agreements?
A business contract is a commercial agreement that records the terms under which parties will do business. As a trading business, a robust contract to govern the sale of your products or services should be a top priority. Using a business contract will help protect your business if things go wrong.
Standard terms and conditions form part of your business contract. Often, they are attached to an Order Form setting out which products or services will be delivered to the customer.
Some key points to note are explained in the table below.
| Feature | Explanation |
| Non-Negotiable | Standard terms and conditions are contractual terms a supplier provides to all customers rather than a bespoke, negotiated contract with each customer. They offer a quick approach to agreeing on a contract, saving the parties time they would otherwise need to spend drafting and agreeing on a bespoke contract. Nevertheless, in some instances, customers may request to negotiate a supplier’s standard terms and conditions. |
| Binding | Standard terms and conditions will only be effective if properly incorporated into a contract. To avoid risk, suppliers should bring standard terms and conditions to customer’s attention and ask them to sign them. Failing to do so could lead to arguments over whether the terms are binding on the customer. |
| Fit-for-Purpose | It is vital that you take legal advice on your standard terms and conditions to ensure that they are suitable and fit for purpose. Your terms will also need to be reasonable to help make sure they are legally enforceable. Particular care should be taken when issuing standard terms and conditions to consumers, as various consumer law requirements will need to be taken into account. |
Standard terms and conditions should cover essential contractual matters, including:
- the price for your products or services and your payment terms;
- the obligations of both parties under the contract;
- when the contract starts and how the parties can end it;
- provisions around limiting your liability as a supplier; and
- data protection provisions, including how to use the customer’s personal data if applicable.
How Can Standard Terms and Conditions Protect Your Business?
There are a variety of ways a robust set of terms and conditions can protect you.
1. Standard Terms Can Save Your Business Time and Money
The purpose of standard contracts is to use one set of terms for all customers. In other words, having a robust set of terms will mean you have one document that you can use over and over with customers.
Using terms and conditions will generally:
- give your business contractual consistency;
- save your business time since you will already have contractual terms ready to present to your customer; and
- save your business money since your business will not have to negotiate a bespoke agreement with each customer.
2. Standard Terms Can Help Avoid Disputes
Disputes often occur in business and can be the result of various problems. For example, a customer may raise a dispute because the supplier has not delivered products or services on time.
A robust supplier agreement can include provisions to manage customer expectations and avoid disputes. Your standard terms and conditions can include explicit provisions about your obligations as a supplier and what you will and will not deliver to help prevent mismatched expectations.
For example, your contracts might grant you a grace period to fix breaches of contract. Suppose you cannot deliver a product on time. In that case, you can include a clause giving you a grace period to notify the customer and rearrange delivery, before the customer can terminate the agreement.
Your standard terms and conditions can also include a process to resolve customer complaints informally. For example, your terms can stipulate that the parties should first negotiate disputes informally before taking legal action.
3. Standard Terms Can Minimise Legal Risk
There are several ways standard contracts can protect your business from risk. For example, using standard terms and conditions can allow you to limit your liability for breaches of contract. As a supplier, your contracts can indicate which types of losses you will not be liable for if you breach the agreement. Your terms can also include a financial cap on your liability if you breach the agreement, which will give you comfort when trading.
Your terms can also help you enforce your rights. For example, if your customer fails to pay on time as per your payment terms, you could charge them interest or take them to court for non-payment.
Finally, your terms can help protect your business from unexpected risks you may not have foreseen. For example, you can include clauses limiting your liability if there are unforeseen events outside of your control that delay the delivery of your products or services.
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Key Takeaways
Standard terms and conditions can help you standardise how you do business and save you time and money. Your terms can include various provisions to protect your business from risk, including limitation of liability clauses. However, it is essential that you correctly incorporate standard terms and conditions into your customer agreements so that they are legally binding and protect your business.
If you need help preparing your business contracts, our experienced commercial 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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