Using a standardised set of terms and conditions has numerous benefits such as:

• to trade on consistent terms with customers;
• in combination with systems and processes, junior members of staff can conclude agreements with customers freeing up senior members of staff to engage on other activities; and
• a measure of control over the risk upon which you provide goods or services.

To save expense, many businesses draft their own terms and conditions. Often it is tempting to draft the terms and conditions to be one sided to protect and/or be more favourable to the business. Although this may act as a form of bluff to scare off challenges, there are many reasons why one sided terms and conditions are a bad idea, including the following:

Relationships

Having good relations with customers is fundamental to the success of any business and as one of the two times when the standard terms and conditions are most likely to be looked at by the customer are at the beginning of the relationship (the other being in the event of a dispute), having a set of fair, reasonable and appropriate terms and conditions makes it clear that your business is looking to build a relationship with its customers and this improves the chances that you will win the business.

Avoiding lengthy negotiations

Rather than be put off, some customers who read “one sided” terms and conditions may seek to amend your business’ standard terms and conditions. If your standard terms and conditions are fair and reasonable, it is less likely that a customer will be put off or seek to amend the standard terms and conditions.

Exclusions and limitations

Under law, certain contractual terms which seek to exclude or limit liability are unenforceable, for example, a term which seeks to exclude any and all liability of any nature whatsoever will be void, as it inadvertently excludes liabilities which cannot be excluded by law such as liability for fraud or personal injury and also because it would prevent any contract arising in the first place.

When dealing with businesses on standard terms and conditions, provided that the term was reasonable and meets certain other requirements, it may be possible to exclude or limit certain types of liability such as for negligence (other than personal injury or death), loss of profit and for breach of contract. There are many factors in determining whether a term is reasonable such as the negotiating power of the parties, whether the parties were legally advised and whether the clause has been heavily negotiated. If a limitation or exclusion is determined to be unreasonable, that term will be unenforceable and your business may be liable for all losses which your business would ordinarily be liable for.

When dealing with consumers, in addition to any applicable regulatory restrictions which should be considered, there is an expanded list of liabilities which cannot be excluded or limited, and additionally, the terms in consumer contracts are required to be fair. In these circumstances obtaining legal advice is particularly important to ensure your business stays on the right side of the law.

Certainty

By having a set of reasonable and fair standard terms and conditions, your business will have the comfort of knowing that your standard terms and conditions will allow you to operate as intended and with some certainty.