Terms and Condition Presented as Standard
One of the most common scenarios, either when dealing as a consumer or a business, is to be presented with a set of standard terms & conditions.
The implication when receiving such a document is that the recipient shouldn’t try and negotiate. There is an inference in certain situations that “standard” may mean industry standard also which will often make the unwary believe that there is little or no point questioning any of the clauses or meanings.
In simple terms, as with any contract, the starting point should always be commercial. How much does the buyer want or need the goods or services and what is the respective bargaining position?
In some instances, there may be a high degree of industry standard clauses in a contract, such as perhaps when booking a holiday. In other cases, there is highly unlikely to be any opportunity to negotiate. An example of this might be a very popular product such as an iPhone or any product from major retailer. That retailer is in all probability not going to negotiate over terms and conditions with anyone.
However, there are many other instances where the position is entirely negotiable and where it is important to read a contract offered to you, especially when it comes to buying services, where there will usually be a bespoke element.
Extra care should also be exercised in a business-to-business scenario. When a business sells to a consumer, it can include whatever exclusion or limitation clauses it wants into standard terms and conditions, but those terms may end up being counterproductive because consumers have various statutory protections such as the Unfair Contract Terms Act which, should there be a dispute, override any unfair clauses and inserting them into a contract could be frowned upon by a court. The same protection does not apply in a business-to-business context, where the parties are seen as being on a far more level playing field, so the court may not interfere with terms which are highly favourable to one party.
Other contracts which are offered on a standard basis can include employment contracts, bank loan agreements, insurance contracts and so on. Good advice is that with any contract of importance, it should be carefully considered and not just accepted as a fait accompli.
Standard contracts can be problematic in other ways
Many small businesses, for understandable reasons, will simply buy a contract from the internet rather than obtaining advice from solicitors. The difficulty in this scenario is that the business using the contract it has simply bought may not fully understand their own contract or at all. With any contract, it’s important that both sides are aware of the terms of the contract, their implications, possible risks, which terms are vital and which not so, and which are potentially suitable for some flexibility or negotiation if the other party will otherwise not agree to proceed.
Battle of forms
Finally, another common scenario is where two businesses who wish to deal with each other both have a set of standard terms and conditions. Each wants their standard terms to apply, and by default, they send their terms and conditions to each other, perhaps on the back of correspondence. This may set up the scenario known as a “battle of forms” where it is likely that the last in the chain of communications will constitute the contract. In this situation, businesses should be alive to the fact that just sending standard set of terms and conditions to the other party and assuming that this will create a contract can be a big mistake. It is vital to stay aware and alert to such issues.
Contact Allan Hooper at JE Baring & Co for expert advice on business terms and conditions that you can trust.