Establishing terms and conditions of business

Getting a new business up and running is exciting, frantic, stressful, tiring but ultimately immensely rewarding. There is so much to do in the weeks before and after launch that some things can get forgotten or “left for later” – particularly if they are not revenue generating activities.

Establishing standard terms and conditions of business is a perfect example. You might ask yourself “Who reads the small print anyway?” while busying yourself with the more important business of getting out there looking for customers and preparing your product or service for marketing.

Deep down, you know that is false logic and you need to get contractual terms in place. For a company that engages in major one-off projects, then this might take the form of a master service agreement, while for a business providing products and services on an ad-hoc day to day basis, you will need standard terms and conditions of business.

Why have Ts and Cs?

Whether you are selling someone a motor car or you are cleaning their windows, you are entering into a contract with a buyer. You will provide something, and they will pay you money for it. The terms and conditions set out each party’s obligations in a little more detail and answer the following kinds of questions:

• What will you supply?
• When will you supply it?
• What happens if it is no good?
• How will you be paid?
• When will you be paid?
• What if you end up in a dispute?

Terms and conditions are all about both parties understanding their roles and responsibilities under the contract. These might sound simple – I clean your windows, you pay me £20. But it is only when things start to go wrong – I slip and break a window or you don’t have the money on you to pay me – that you appreciate just how important those terms and conditions are.

One size does not fit all

Using a standard template is a great way to make a start, and will help ensure you have all the main terms in place. However, every business is different, and some will need specific terms that another doesn’t. For example, if your work requires you to enter a customer’s home, that opens up a whole new area of potential risks compared to if the client visits your site, or if all work is conducted electronically and you never physically meet at all. This is why it is so important to sit down with a lawyer to ensure all the bases are covered.

Tips to keep in mind

As you put the terms together, keep the following pointers at the forefront of your mind:

• What’s the worst that could happen? Think of everything that could possibly go wrong, and set down what you would do in that scenario.
• In each case, assume you are dealing with the most awkward and intransigent customer imaginable.
• Read each term from the perspective of the customer. Does it make sense and is it reasonable?
• Be clear. Hiding unfavourable terms is tiny font in the hope that nobody sees them is a strategy that invariably backfires and will only show your business in a bad light.