Terms of Trade, also known as Conditions
of Sale or Terms and Conditions, are designed to protect the seller's rights,
to
limit potential liabilities and provide some degree of security for the
recovery of the debt, following the supply of goods or services.
Equally, the seller will have his/her own terms. What
is essential is that both contracting parties (i.e. buyer and seller)
agree Terms of Trade between them before, or at the time that a contract
is made. This will set the ground rules between the contracting
parties. It will mean that both parties know exactly what is expected
of them and may prevent unnecessary disputes.
A good time to agree Terms is when the seller has
had their credit facility letter formally accepted by the customer.
Areas which should be mentioned in a company's
terms of trade include:
| 1.Definitions (e.g. "buyer", "seller") |
2.Quality |
| 3.Price |
4.Quotations |
| 5.Delivery/date/arrangements |
6. Risk and property/retention of title |
| 7.Terms of payment |
8.Time limit for raising disputes |
| 9.Right to interest and compensation for debt recovery
costs |
10.Loss or damage in transit |
| 11.Acceptance of goods |
12.Variations to contract |
| 13.Patent rights/indemnity |
14.Force majeure |
| 15.Jurisdiction/applicable law |
16. Assignment and subletting of contract |
| 17.Right to progress and inspect goods |
18. Warranties and liability |
| 19.Severability |
20.Insolvency and bankruptcy |
The preparation of contractual Terms of Trade, in
particular those which apply to specialised areas of trading, requires
a significant degree of legal expertise. Unless such expertise is used
there are real risks that a supplier and purchaser, when entering into
a contract for the supply of goods or services will innocently fall into
one of many pitfalls in this area.
While it may not be practical or cost-effective to
take legal advice before supplying each customer, it is advisable that
you should take the advice of a solicitor or in-house legal adviser when
the terms of your 'Standard Conditions of Sale' are being drafted. |
