Knowing which parties’ terms and conditions (T&Cs) are incorporated into a commercial contract is clearly fundamental to doing business confidently. Whilst this may seem straightforward in principle, it is not always so in practice.
Your standard T&Cs will not automatically form part of the contract, and, if steps are not taken to incorporate them, you are at risk of implicitly accepting the other party’s. Practical tips to help B2B parties (suppliers and customers) incorporate their T&Cs are set out below.
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Bring your T&Cs to the other party’s attention
An essential part of ensuring your T&Cs apply to a contractual relationship is bringing them to the other party’s attention and stating that your T&Cs will apply. This should be done as early as possible in your pre-contract correspondence with the other party and prior to entering into the contract with the other party.
Timing suggestions of when a supplier and customer should consider doing so are set out below.
Supplier: Where possible, provide/refer to your T&Cs with your quotation (as well as when you accept the customer’s order). Even though a quote will not typically constitute a legally binding offer, it is a good opportunity to bring your T&Cs to the customer’s attention. Make sure your T&Cs are not simply put on the reverse of a quotation and are expressly brought to the other party’s attention. Incorporation when invoicing is too late, i.e. your T&Cs will not apply if the first time of mentioning them is on your invoice.
Customer: When responding to a quotation – state that your T&Cs will apply to any contract between you and the supplier and provide them.
Additional pointers on how to bring your T&Cs to the other party’s attention during pre-contractual correspondence by email and phone are set out below.
As a Supplier submitting quotes/acknowledging orders, or as a Customer responding to quotes/submitting orders:
- attach your T&Cs and state that they apply; and/or
- upload your T&Cs to your website, state that they apply and provide a hyperlink to them (making sure you are directing the other party to the correct version).
As a Supplier receiving orders, or as a Customer making an order over the telephone:
- inform the other party that the contract will be subject to your T&Cs;
- ask the other party if they have a copy of your T&Cs, and if not, email them a copy or a hyperlink to the relevant T&Cs on your website – re-stating in your email that your T&Cs apply to the contract; and
- make a note of your conversation internally.
What if the Supplier and Customer both try to assert their T&Cs apply?
nder English law, usually, the T&Cs contained in the last document passing between the parties will govern the contract. However, to avoid this – if you receive the other party’s T&Cs – you should:
- not act in a way which suggests you accept their T&Cs – e.g. as a supplier, do not supply the goods or services in response to an order attaching the customer’s T&Cs, or, as a customer, do not pay (or say that you will pay) for the goods or services; and
- immediately notify the other party that you do not accept their T&Cs and that the contract will be concluded on the basis of your T&Cs.
In the event this proceeds in a never-ending loop of no one accepting the other’s T&Cs, it is possible that neither party’s T&Cs will be incorporated – and the contract will be governed by each party’s statutory rights.
Incorporating onerous or unusual clauses
As a supplier, even if a customer accepts that they are contracting on the basis of your T&Cs, there is a risk that any onerous clauses in your T&Cs will not be incorporated (i.e. will be unenforceable) unless those clauses have been fairly and reasonably brought to the customer’s attention.
Examples of clauses that are likely to be considered onerous include:
- Requiring the customer to pay for the return of goods
- Charging excessive cancellation fees not reflecting the costs borne by the supplier
- Any clause which seems outlandish or unusual for the sector.
One way to help bring any onerous clauses to a customer’s attention would be to put the following words in bold at the top of your T&Cs “The Customer’s attention is particularly drawn to Clause(s) [x]”.
How can Goughs help?
Goughs regularly prepares T&Cs for businesses to help provide them the best protection in their contracting processes and in the specific context of their industry. Goughs is also happy to review and update a business’ existing T&Cs to enhance their protection.
If you require any assistance with your T&Cs, please do get in touch via email@example.com