Terms and Conditions template

Terms and Conditions help protect your business by setting out clear legal terms on which you trade.
They establish the legal framework for how your business provides its goods or services. They set out the rights and responsibilities of both parties in the legal relationship and allocate and reduce risk.

• T&Cs provide your business with a consistent set of contractual terms
  
• they help avoid unnecessary negotiation with customers and counterparties
  
• they reduce uncertainty and the risk of disputes by clarifying key points such as payment terms, delivery obligations and liability
  
• consistently applying your T&Cs helps ensure the customer’s own terms do not apply by establishing yours from the outset
  
• they can be essential where contracts are formed without direct communication, for example online or over email
  

Without T&Cs, your business could be exposed to legal and commercial risks. If a dispute arises, you may have no clear terms to fall back on, leaving you open to claims or liabilities you could otherwise have avoided.

T&Cs need to be properly incorporated into your contracts to be effective. This usually means making them available to the customer before the contract is made and getting clear acceptance. Done properly, they offer vital protection for your business and create consistency in your dealings.

Terms and Conditions usually cover key commercial, legal and practical matters.
These help clarify the scope of the agreement and protect your business from unnecessary risk.

• key details about what is being supplied (goods or services)
  
• payment terms, including how and when payment must be made
  
• delivery terms or performance timescales
  
• how risk and ownership transfer to the customer
  
• limitations of liability and exclusions for loss or damage
  
• terms dealing with defective goods or poor service
  
• terms about termination or cancellation
  
• data protection and confidentiality obligations
  
• ownership of intellectual property rights, where relevant
  
• application of governing law and legal jurisdiction to the contractual relationshi
  

T&Cs may also include specific clauses to protect your business, such as exclusion of implied statutory terms or limitation of liability clauses. These need to be clearly drafted and comply with applicable rules of English law, including the Unfair Contract Terms Act 1977.

If your T&Cs are well drafted and clearly presented to customers, they help you avoid misunderstandings and disputes, and give your business a stronger legal position if problems arise.

Your business is responsible for having proper Terms and Conditions.
It is down to the business to ensure it has appropriate T&Cs in place and that they are kept up to date.

• T&Cs should be carefully drafted to reflect how your business operates
  
• using a professionally prepared template is a good starting point
  
• templates should then be tailored to your specific circumstances where necessary
  
• a solicitor can help you ensure that your T&Cs are properly drafted and legally effective
  
• you are also responsible for ensuring T&Cs are properly incorporated into contracts, whether through signatures, quotes, order forms or your website
  

Once in place, T&Cs should not be forgotten. They need regular review to ensure they still reflect your current business practices and legal requirements. Failure to update your terms may leave your business exposed to unnecessary risk, especially if the law or your commercial arrangements have changed.

Keeping T&Cs relevant and current is part of good business practice and helps protect you from future liability and disputes.

“Implied terms” are contractual provisions which will be assumed to have been included in a contract even though they are not expressly written.  Terms which are expressly included in the contract are “express terms”.

Implied terms can arise for a number of reasons, including:

• terms implied by statute – for example, the Sale of Goods Act 1979 in the case of a B2B sale of goods 
• terms implied by common law
• terms implied by custom or usage, for example the custom or usage of a particular trade
• terms implied by previous contracts and dealings between the same parties
• terms implied to reflect the parties’ intentions but which they did not expressly include in their terms and conditions agreement

In the context of Terms and Conditions for the sale of goods or the supply of services on a B2B basis, terms implied by statute are particularly relevant, namely:

• in the case of the sale of goods, the Sale of Goods Act 1979
• in the case of the supply of services, the Supply of Goods and Services Act 1982
• in both cases, the Unfair Contract Terms Act 1977

Terms will be implied by these statutes into B2B contracts for the sale of goods or the supply of services (including into Terms and Conditions).  The statutes also provide where (if at all) these implied terms can be excluded or limited by the express terms of the contract.

The guidance notes which accompany our template Terms and Conditions include further explanation of this subject in more detail in the context of the applicable form of template Terms and Conditions.

Terms and Conditions should be reviewed and updated whenever there are changes to your business, your services or the law.

• review at least once a year as part of your risk management process
  
• update sooner if your business changes how it supplies goods or services
  
• review if new regulations or laws affect your industry or contracts
  
• check after significant disputes to see if clearer wording would have helped
  
• ensure updates are properly communicated to customers to avoid disputes over which terms apply
  

Outdated T&Cs may not reflect how your business operates or comply with current law. This can leave gaps in your legal protection. It can also cause confusion if disputes arise over your rights and obligations.

Keeping your T&Cs up to date shows good governance and helps ensure you are legally protected and commercially prepared for future challenges.

The battle of the forms arises where both parties to the contract seek to apply their own Terms and Conditions.  

As an example:

• a seller of goods sends its Terms and Conditions to the buyer with a sales quotation which states that the seller’s Terms and Conditions will apply to the sale
• the buyer has its own Terms and Conditions for the purchase of goods and sends these to the seller along with the buyer’s acceptance of the seller’s sales quotation, in an attempt to apply and make its terms and conditions legally binding
• the seller starts making deliveries of goods to the buyer under the contract
• a dispute subsequently arises between them and, as their Terms and Conditions deal with the disputed matter in a different way, the question arises as to which of their Terms and Conditions are legally binding and apply to the contract

The answer will generally depend on when the contract was concluded and whose Terms and Conditions had been incorporated into the contract at that stage.  Often, this will be the party which last put forward its Terms and Conditions (assuming the other party had not expressly rejected them).  In this case, the buyer is likely to have made a contractual offer to the seller when the buyer sent its acceptance of the seller’s sales quotation.  This offer was accepted by the seller when it started to perform the contract.

English law, established by a combination of caselaw and statute, provides for the remedies and rights of recovery which a contracting party will have if the other party is in breach of contract.  For example, a right to terminate the contract and/or bring an action for damages for breach of contract.

English law also implies certain terms into contracts.

A party to a contract can seek to exclude or restrict its potential liability for breach of contract and the application of implied terms into contracts by including express exclusion clauses or liability limitation clauses in the contract. 

Read our article on understanding limitation of liability to learn more.

The inclusion of these clauses is however subject to a number of rules (once again established by a combination of caselaw and statute).  These must be taken into account in determining whether a particular clause has been properly included in the contract, how the clause will be interpreted should a dispute arise and whether there are any rules which will either prohibit or limit its effect.