Terms and conditions are an essential way to protect your business. Although it’s not a legal requirement to have terms and conditions, we have set out below some points which demonstrate why we recommend having terms and conditions in place.
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Protection in times of dispute
Terms and conditions set out clear rules for what is expected of you and other parties whether they are your suppliers, customers or other third parties, therefore reducing the risk of legal disputes and misunderstandings. In the case of a dispute between the parties, the T&Cs are usually the first point of reference to reach a resolution.
A properly drafted set of terms and conditions will also stipulate in which country legal action should commence if the matter escalates and court intervention is required.
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Limiting liability and exposure to risk
By limiting liability and having certain disclaimers, terms and conditions can protect your business from excessive legal claims. In the absence of having any limitation on liability your exposure to risk and damages awarded to the other party can be unlimited even if the transaction value is a small amount.
Limits on liability can also limit your obligations if a situation arises where you are unable to fulfil your obligations due to circumstances outside of your control e.g. a pandemic or government sanctions.
You can also clarify your own warranties and any returns policies within the T&Cs.
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Legal compliance
Terms and conditions help to ensure your business complies with relevant laws and regulations. For example, informing other parties of how their personal data will be collected and used is a legal requirement under data protection laws.
Certain businesses are regulated because of the industry that they operate within. It may be a lawful requirement for certain points to be included in the terms and conditions. For example, certain travel and tourism businesses are regulated by The Package Travel and Linked Arrangements Regulations 2018 which means that any terms and conditions must contain specific information to protect consumers and ensure transparency.
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Protecting business assets
By setting out clear boundaries on ownership of assets, this avoids disputes and potentially having to give up those assets later on.
This is particularly important where intellectual property is a key asset in the business. Properly drafted terms and conditions should state your business retains ownership of all intellectual property associated with your products services and content. This includes trademarks, logos, designs, software and any other proprietary information.
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Clarifying roles, rights and responsibilities
Terms and conditions should set out clear expectations regarding services for each of the parties.
By covering off delivery, services times, payment deadlines and consequences for late payment this ensures that all parties are clear on expectations, obligations and avoids ambiguity.
In summary, terms and conditions govern your relationships with customers, suppliers and third parties, trading without having them can have disastrous consequences for you and your business regardless of its size. Our solicitors will work with you to draft a robust set of T&Cs suitable for your business.
Should you have any queries regarding this, or any other Commercial matters please don’t hesitate to contact Josiah Hincks Solicitors and we would be happy to help.
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Written by Palbir Vadesha.
