Standard terms & conditions are important in many businesses. They provide the rules under which the business supplies its goods or services. It is important to regularly review these terms to ensure that they reflect the current requirements of your business.

1. Ensure your terms are suitable for your business.

Frequently we see terms which are brief templates from the internet or copied directly from another business. These may exclude provisions required for your particular business, including when title and risk in goods pass to the customer, or matters that are specific to your business. Generic templates may also refer to foreign laws. This can make the terms difficult to enforce if you are in a dispute with a customer.

2. Determine whether your terms sufficiently protect you if clients don’t pay.

Relevant remedies could include charging interest on outstanding amounts, withholding further delivery of goods or services, or terminating the agreement. Where you are selling goods on credit, a well-drafted retention of title clause is critical, with rights to recover goods from any premises occupied by the customer if they are in default.

3. Consider what happens if you cannot deliver your goods or services due to circumstances outside of your control.

Many businesses have experienced delays and supply shortages due to the COVID-19 pandemic and other unexpected events. A “force majeure” clause will relieve a party from liability for events outside of their reasonable control. Such events will need to be specified in the contract, and usually include natural disasters such as fires and floods, as well as pandemics and wars.

4. Ensure your Intellectual Property is protected

Where your work involves the creation of designs, reports or software, it is critical to ensure that your intellectual property (IP) rights are protected. IP includes intangible rights such as trade marks, copyright, patents and designs. A well-drafted IP clause will protect your pre-existing IP and confirm who will own the IP in any work created. If you are retaining the IP in any created works, you may need to grant your client a limited licence to use that IP for their internal business purposes. In addition, you should consider whether you need the client to licence any of their IP to you (for example, if you are incorporating their material into the work you produce).

5. Consider what rights your customers or clients may have under the Australian Consumer Law

Under the Australian Consumer Law (ACL), businesses must guarantee goods and services they sell, hire or lease where the price is under $100,000, or they are goods and services normally bought for personal or household use. Where the ACL applies, there are mandatory guarantees that your terms & conditions cannot exclude. For example, goods must be fit for purpose, match their description, and be of acceptable quality. Services must be provided with acceptable care and skill, and be fit for purpose. We recommend that your terms & conditions acknowledge any consumer law rights, and otherwise seek to limit your liability to the extent possible. 

6. Ensure that the scope of any warranties is clearly defined

The terms of any warranty should be fully stated in either the terms & conditions or a separate warranty document. If the warranty relates to goods, we recommend that your terms include a right for you to inspect the returned goods and outline the criteria on which you can reject a warranty claim (for example, if the goods were misused). Please note, however, that such rights may be subject to the ACL.

These are only some of the many considerations when reviewing commercial terms. The experienced commercial team at Rouse Lawyers would be pleased to assist. If you have any questions, please contact us on 07 3648 9900.

Disclaimer

The information contained on this website is for general guidance on matters of interest only. The application and impact of laws can vary widely based on the specific facts involved.

Accordingly, the information on this site is provided with the understanding that the authors and publishers are not providing legal advice. As such, it should not be used as a substitute for consultation with professional legal advisers. Before making any decision or taking any action, you should consult with a professional lawyer from Rouse Lawyers.

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