Terms of Business – Not Just the Small Print
Pretty much all organisations should have carefully constructed terms of business. This is more than just the ‘small print’ some of us have come to expect but sadly largely ignore. They often form the contractual basis between the seller and the buyer. If agreed, the terms should be enforceable if there is any disagreement or dispute.
Another area that needs careful consideration is key supplier agreements. These frame a relationship and help both parties understand the basis of their relationship. The content of these requires some thought. For example, we have seen agreements where the termination periods are extensive limiting the flexibility of an organisation to move quickly and act in an agile way in response to changing economic circumstances. This has been an issue for some during the recent pandemic when organisations most affected by the lockdown, sought to reduce overhead costs and were constrained by the agreements they had in place. There is a flip side to this in that most organisations do not want to be exposed by the quick exit of a key supplier.
Where two organisations disagree the supply agreements between them are typically the base for determining a dispute. Without well-constructed agreements in place, that are reasonable and will stand up under scrutiny, the options available are limited, dispute resolution processes may be compromised and an organisation could be exposed to loss.
We therefore recommend that organisations regularly review their core terms and conditions of business – whether these be as issued to customers or with key suppliers so that they adequately reflect their needs. There are some template forms available but these can be dangerous in that they are by definition generic and not specific to a particular organisation. We advise our clients, especially SME’s who may overlook the need for these agreements, to work with us to draft these key documents. This will help ensure they will have a layer of protection that would not exist without adequate terms of business being in place.
If you are experiencing a commercial dispute, or would like to review or put in place commercial agreement documentation please contact us and we will be delighted to assist you.
T: 0800 302 9448