Commercial Update 103 – Key Contractual Clauses

For this week’s commercial update we are looking at key contractual clauses to both review and make sure that your terms and conditions have right.  

Whenever supplying services or goods it is important to make sure that issues such as liability, when the contract can be terminated, how the contract can be interpreted are dealt with.

When looking at a contractual refresh of your T&Cs one starting point is to look at the following areas:

  1. Use properly defined terms that significantly set out the rights responsibilities and obligations of the parties.  Go for clear and concise language and avoid anything that is over complicated where possible.
  1. In terms of termination provisions make sure these set out the circumstances where either party can terminate the contract.  It is important to make sure that these are as clearly set out as possible so that everyone is clear on what rights they have to bring a contract to an end and what notice period to use.
  1. Think about a process for resolving disputes.  Dispute resolution clauses can be really helpful to head off and in some cases prevent the parties from having to litigate. Some sensible generic boilerplate clauses in your terms and conditions dealing with when a contract can be varied, the choice of law and even an alternative dispute resolution mechanism can be really, really helpful as well as dealing with outstanding points such as who shall pay for resolving the dispute.
  1. Make sure that any limitation of liability clauses are clearly set out and remember section 3 of the Unfair Contracts Terms Act 1977 that provides that in a business to business arrangement where contracting parties deal on one party’s written standard terms a party can only exclude liability for breach of contract if that term is reasonable.  This reasonableness test is applied at the time the contract is made and considers what the parties knew or reasonably contemplated at the time.

In conclusion however the key thing is to make sure that your terms of trading are in the best possible shape to prevent further disputes or hassle further down the line.

T&C’s if properly put together can prevent issues from arising and dictate not just the terms of the supply of the goods or services in question but also set out the stall early on early on in terms of how the parties intend to contract ,which can bring benefits and create good working relationships from the start.