All businesses are at risk from bad debts and the patchy recovery from recession means many companies have been struggling to survive.
Should your customers become casualties of economic turmoil, their problems threaten to become your own. It need not be that the business has failed. Declining product quality, delays or missed deliveries can all disrupt your business.
That’s when you need to have sound contractual arrangements underpinned by terms and conditions (Ts and Cs) that can reduce the risk of litigation while limiting your own liability.
The terms of a deal must be clearly understood by both parties. Carefully drafted Ts and Cs are a worthwhile investment that can increase certainty in business dealings, allowing you to concentrate on building a mutually profitable relationship.
They should be kept up to date with changing law, domestic and European, by asking your solicitor to conduct a regular review.
According to Jeremy Bouchier of Restons Solicitors, “The law endorses the concept of freedom to make a contract and that includes the ability to make a bad one.”
He recently wrote in CCR Magazine that in some cases parliament has stepped in to protect the potentially vulnerable. For example, the Consumer Credit Act governs the lender-borrower relationship and the content of credit agreements.
Businesses, though, are usually relatively free to negotiate contracts. The negotiation may continue even while the parties attempt to agree the specification of an order.
He points out that “to form a legally enforceable contract there has to be an offer and acceptance; to be valid the acceptance has to correspond exactly with the offer”. The negotiation can go backwards and forwards until a counter-offer is accepted. It is the specification and any relevant trading terms of this offer that prevail.
Can you be certain who “fired the last shot” in the legal “battle of the forms”? Bouchier cautions that if a supplier starts work on a contract, this conduct can be taken in law to infer acceptance of the buyer’s Ts and Cs.
But, he adds, the High Court signalled in a 2010 ruling that attempts by both sides to incorporate their terms had failed and the contract was governed by the Sale of Goods Act. This law only covers basic points and, in similar cases, that might be bad news financially for one party.
The Ts and Cs of SJ Collections oblige me to make “every reasonable endeavour to recover sums and debts that are properly owing to the client”. The work, in the form of instructions or as agreed in writing by SJ, must be carried out with “an appropriate duty of care”.
They make clear that expenses and costs, such as court fees, third party investigation fees and travel, are paid in advance.
Where there is a contingency fee arrangement, the standard terms are set out, as are the interest charges to be applied where an invoice remains unpaid for more than 14 days.
It can be that a client receives settlement or interim payments directly, or this is made to SJ Collections. A clause obliges the one to inform the other. It also allows SJ to negotiate a settlement where the client agrees to this approach.
One of the main mistakes businesses make it put their Ts and Cs only on the back of their invoices. Too late. By the time the invoice goes out, the contract already been performed and you cannot rely on your Ts and Cs retrospectively. That’s when it time to call on the services of SJ Collections to obtain the return of your money.
If you want to head off trouble from the start, but need help getting the right Ts and Cs for your business, SJ Collections can put you in touch with a legal expert in contracts.