Terms of Business (also known as Terms of Service) are the key to ensuring both you and your clients know exactly where you stand, legally and commercially, at any point whilst you are working together.
It can be tempting to think there is a one-size fits all template when drafting terms of business and although there are some standard clauses you can expect to see, which we will discuss below, tailoring these to your business, industry and clients is the key to conducting business confidently.
Why Terms of Business matter?
Although agreements are usually negotiated in good faith, without clear terms, in the event of something going wrong e.g. a missed deadline for service delivery, late payment or an ever-altering scope of services, it is a long and arduous process in trying to un-pick who was responsible and what action to take next.
With clear terms, both parties will know exactly where they stand at all times and in the event of such situations.
There are also minimum requirements in relation to information given about your company that is legally required within your terms and conditions (particularly if you operate online), as well as additional obligations placed on you if you are dealing with consumers.
We will ensure any such minimum requirements are met within your terms of business, based on your industry sector.
Whose Terms of Business should apply?
You should be clear from the outset as to whose terms should apply to the work you provide to clients. When business terms are accepted via a tick box on a website, for example, this will be obvious.
However, in the scenario where you are negotiating via email prior to a deal being agreed, ensure you have also sent over your terms of business and state that negotiations are subject to acceptance of such terms, so there is no dispute over whose terms apply further down the line.
A good reason for suggesting your terms are used, is if they are tailored to your business and industry sector, they will almost certainly be the more suitable than generic Terms and Conditions.
We will make sure your Terms of Business have a clear mechanism for acceptance and one that is right for the way in which you do business.
What should Terms of Business include?
- Scope of Services: Your terms of business should set out the scope of services, this could be in a schedule, order form or they will link directly to a website and/or document which sets out such scope. These services and any associated deliverables can be detailed alongside key dates or milestones which are required to be met, or there will be a mechanism to deal with any such non-compliance.
- Payment terms (and late payment): This is obviously important for cash flow reasons and clear milestone payments flagged in your terms and/or payment schedule make it easy to substantiate any claim you might have for late payment. Furthermore, you should also include a contractual mechanism to recoup interest on any late payment, that is in addition (and more generous) than the default statutory provision.
- Termination: Knowing how either you or your client can cancel, at what time and any financial impact this might have is an integral part of your terms of business. You may require a minimum commitment to make a deal worthwhile to you and this will be key when considering your term and termination clauses.
- Intellectual Property: Your terms of business should clearly set out who owns any intellectual property contained within the deliverables and/or products of the services created as a result of your agreements with your clients. Usage and exploitation of assets and intellectual property is crucial to a number of deals and if there is not clarity over who owns what, you can find yourself having very difficult conversations with your clients down the line.
- Data Protection: Your terms of business should clearly state how any data is being processed as a result of your agreement. We can tailor bespoke data processing clauses dependent on any personal data being shared, stored and processed.
- Limitation of Liability: Limitation of liability is always a key issue in any terms of business as if you are acting as a supplier of services, you will want to restrict your liability under the contract as far as is legally possible.
It’s what is not said that counts
It is not recommended to blindly sign up to any terms of business, as it is normal for either party to put forward their best case scenario in their own terms. However, it is often the issues that are silent that cause the most difficulties with contracts.
How you deal with scope creep and the performance of additional services, exclusivity and/or if there aren’t appropriate termination mechanisms are common examples of where terms of business are not fit for purpose.
Bottom line
At Linkilaw Solicitors, we get to know your business and follow your client or user journey to ensure your terms of business work for you. We want you to be confident of the contents, so that at any one time, you know where you stand and that they facilitate you to carry out business confidently, without worrying about the legals.
If you require further assistance on Terms of Business, don’t hesitate to schedule a call with one of our legal specialists.
Our legal commentary is not intended to be a comprehensive review of all developments in the law and practice. Please seek legal advice before applying it to specific issues or transactions.
