Terms and conditions are an integral part of most well-run businesses. The RMB Business and Commercial Law Division explains their importance.
Terms and conditions can instil a sense of confidence in customers as they can see that your business has a clear set of terms that govern the provision of services or the sales of goods.
To keep your business running at an optimal level and to help prevent misunderstandings with your customers, you need to ensure you have well-drafted and up to date terms and conditions.
Commonly, good terms and conditions will contain the following:
- Quoting and payment: how orders are placed, when your customer is deemed to have accepted a price and your terms and conditions, and when payment will be required.
- Consequences for failure to pay: to encourage quick payment of invoices, terms and conditions should include clauses that allow you to charge interest on overdue amounts, recover your legal costs for debt collection, repossess the goods if invoices remain unpaid and allow you to report the debt to a credit reporting agency.
- Intellectual Property: can be protected by your terms and conditions, which should confirm who owns intellectual property and if and when a customer is permitted to use such intellectual property.
- What happens in the event of a breach: the terms should list events of default and allow you to terminate the agreement if such a breach was to occur. Common customer breaches include failing to comply with the terms or failing to maintain solvency.
- Dispute resolution: Terms that include dispute resolution processes may allow opportunities to resolve a matter before the parties incur the significant costs associated with Court proceedings.
- Warranties and disclaimers: to reduce your liability in respect of customer claims to the maximum extent permitted under Australian Consumer Law.
Recent changes to the law have seen the need to ensure that terms and conditions:
- Do not contain any unfair contract terms that breach the Australian Consumer Law and could be deemed unenforceable. Such terms could include automatic renewal clauses where the customer is receiving no consideration for the fees they are paying, or severe cancellation fees that are deemed penalties; and
- Allow you to delay the provision of goods or services due to circumstances outside your control, such as Government regulations or a delay in the supply of raw materials.
If your business requires some terms and conditions or reviewed, your first step should be to contact our office to arrange a free consultation. You can contact us by by phone or our 'Ask a Question' tool on our website.