Terms and conditions: services (pro-customer)

When do I use this document?

• as a regular business client/customer for services
• where both the client/customer and supplier are based in the UK
• for terms and conditions prepared more for the benefit of the client/customer than the supplier

What are the key features?

• 21 paragraphs over 8 pages
• contract and incorporation: provisions detailing what the contract comprises and how the Terms and Conditions are incorporated into the contract
• provisions relating to commencement date and duration, fees and payment
• enhanced obligations from the supplier regarding the services to be provided
• mutual exclusions and liability limitation clauses
• mutual force majeure clause

What else do I need to know?

A business which contracts as customer with service providers on a regular basis will likely require a pre-prepared set of contractual terms which it will seek to apply to its contracts with the service providers.

Businesses will use Terms and Conditions for the following principal reasons:

• so that they have a consistent set of contractual terms which apply to their business dealings
• to seek to avoid or limit negotiation or discussion with service providers on the contractual terms
• to prevent the service provider’s Terms and Conditions from applying to the contract

How should a party apply its Terms and Conditions?

Terms and Conditions will only apply to a contract if they have been incorporated into the contract.

In the absence of a signed contract which either sets out the Terms and Conditions, it is important that a customer applies a consistent and practice in all pre-contract discussions and negotiations with its service providers.  This should include identifying in its own pre-contract documents, for example quotations or purchase orders, that its Terms and Conditions will apply to any contract and to provide a copy of them to the service provider.  If the service provider provides or refers to its own Terms and Conditions, for example in its own purchase order or acknowledgement of order, the service provider’s Terms and Conditions could apply if no objection or response is made by the customer to the effect that its own Terms and Conditions should apply.

If both parties insist on their own Terms and Conditions applying, the preferable solution is to try and negotiate the differences between the two sets of Terms and Conditions so as to reach a mutually acceptable position on the basis of one party’s amended Terms and Conditions.

What is the battle of the forms?

The battle of the forms arises where both parties to the contract seek to apply their own Terms and Conditions.  The answer to the question as to which should apply 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) – who has fired the “last shot”.

What terms are implied in contracts for the provision of services?

Unlike a contract for the sale of goods, relatively few terms are implied in a contract for the supply of services.

The principal applicable statute is the Supply of Goods and Services Act 1982 (“SGSA”).  This implies the following terms in a B2B contract for the supply of services:

• reasonable care and skill: that the supplier will carry out the services with reasonable care and skill
• time for performance: if the contract is not fixed by the contract, left to be fixed in a manner agreed by the contract or determined by the course of dealing between the parties, that the supplier will carry out the service within a reasonable time
• consideration: if the price for the services is not fixed by the contract, left to be fixed in a manner agreed by the contract or determined by the course of dealing between the parties, that the customer will pay a reasonable charge for the services

Can the SGSA implied terms be excluded or restricted?

Yes, under the SGSA and subject to the Unfair Contract Terms Act 1977 (“UCTA”), the SGSA implied terms can be excluded or varied by the contract itself by the course of dealing between the parties or by usage.

In practical terms, the only implied term which is likely to be relevant is the implied term to use reasonable skill and care – the subject matter of the other implied terms is likely to be covered by the express terms of the contract.

Often, a customer’s own terms and conditions will in any event include an express term which extends the implied term of reasonable care and skill.  For example, the customer might include a term that the service provider will provide the services diligently and in accordance with best practice of the profession, trade or industry of the service provider.

Exclusion clauses

Generally, exclusion clauses and liability limitation clauses in contracts for the supply of services are subject to the requirements of UCTA and are discussed in more details in

• Terms and Conditions