The most important thing for consumers is choice. Competition delivers better value and puts you in control of how much you spend, when you spend it and with whom. With such a large choice the risk of being in business has grown, so for savvy business owners both large and small appreciating the value offered by having a good set of terms and conditions that are aimed at establishing a service baseline, the rules of engagement if you like that governs any relationship they have with either customers or suppliers has become critical. The whole point of having a set of terms and conditions is informed decision making that enables the various parties to make decisions about the basic nature of their relationship transactions and to have a relationship that is as smooth as is reasonably possible for the duration; so how do you know what a good set of terms and conditions is?

It is important to know that terms and conditions are the essence of a contract; that is the final offer and its acceptance which signify that the parties have reached an agreement over the essential terms of a contract. There may be additional elements specific to you or your business or the transaction which may be represented in a separate schedule, however the purpose of having a set of terms and conditions is to lay the foundation to a business arrangement prior to work commencing.

Terms and conditions come in many sizes from a one page document perhaps attached to a quote or proposal to a multi page agreement imbedded within the greater context of a much larger document; nevertheless there are some standard elements which are generally present. These include:

Other bits like what happens in the event of a dispute, who holds the risk and the definition thereof, confidentiality, intellectual property rights and copyright may or may not be there but you can expect these to be present in a much larger document.

In general, I have found whoever presents the terms and conditions has designed them in such a way as to structure the document in their favour and why not? There is nothing wrong with that approach; however we just have to make sure we read, understand and agree with the terms or negotiate for change. Having a set of terms and conditions is no guarantee of a job well done. This is still going to come down to the parties involved and their representatives, however a good set of terms and conditions apply a set of rules which are fair and reasonable and most importantly agreeable to all parties.

Things to watch out for are the hidden terms such as personal guarantees generally embedded in larger documents as these are designed to ensure payment terms are met if not by the company then by the directors or its trustees. Watch out for other ambiguities such as the use of ‘reasonable endeavors’ – what is reasonable to one party may not be reasonable to another. If there is something you don’t agree with or don’t understand, have it defined, preferably in writing, within the body of the terms and conditions so that it is clear to all parties as to the intention at the time created and something you can work with.

The most common pitfalls are not reading the terms and conditions properly or in many instances not reading them at all, followed closely by assuming something in the document will never happen and having never considered the possible impact when it does. Of course if this is a risk you are willing to take then that is your choice, however if it’s not then make sure the person in your business receiving and negotiating terms and conditions knows what to do with them. As a general rule it is much harder to renegotiate after the fact so getting the terms and conditions right in the first instance should be a priority.

A good set of terms and conditions should be immediately obvious to the reader as they will be designed in such a way as to provide an agreeable set of rules of engagement that are fair and reasonable to all parties. Let’s just hope the reader has the skills to know what they are reading at the time and the authority to accept on behalf of your business as a mistake at this point could mean disaster or have a significant financial or other impact to your business in the future.

How we can help you
If you have any questions about terms and conditions or the way your business is managing its customers, suppliers, contractor arrangements or about contracts in general whether in writing or not, our team is experienced in working with both large and small businesses across a wide range of industries and we can assist you with strategies and expertise in developing policies and procedures to future-proof your business. If you would like to discuss this further, please contact any of our team members on 0800 464 844.

Cathy has more than 20 years of experience across a wide range of disciplines including Service Delivery, FMCG, IT, Banking and Telecommunications having worked with major New Zealand and dominant global organisations. Outsource management, cost saving and contract management strategies are areas she is both professionally and personally passionate about.
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