Have you ever asked yourself: “Do I really need business to business (“B2B”) terms and conditions?” Alexandra Clapp, a Senior Associate in our Commercial Team, has provided a useful explanation below as to why your answer may well be “Yes!”
Whether you are a start-up or an established business, a robust set of terms and conditions for the supply of goods and/or services provides both the supplier and the customer with certainty as to the terms on which they are contracting. Well-drafted terms and conditions enable the parties to set out the key commercials terms that they want to record and to allocate risk between themselves if something goes wrong.
Some of the key terms that a B2B supplier and customer will want to record are things like:
Whether you are a B2B supplier or customer, having a robust set of terms and conditions can give you peace of mind and let you do what you do best: run your business!
If you are a B2B supplier, then well-documented terms and conditions can provide you with certainty of the terms on which you are contracting and protect your position if there are any issues supply side in terms of delivery, timing or any issues around force majeure. You will want clear terms on the amount and timing for payment and to minimise any ability of the customer to withhold or set off payment. When title and risk in the goods transfers is also likely to be of key concern to you.
Equally, if there is a breach of any of your warranties in your terms and conditions then knowing that you have a robust limitation of liability clause that is watertight with a low cap on liability becomes very important. The importance of these terms cannot be underestimated. These are the basis on which a supplier contracts with every single individual customer. Not having terms that adequately protect the supplier could ultimately result in a significant cost to the supplier when multiplied by every customer.
Alternatively, if you are a B2B customer receiving goods and/or services then certainty as to price, timing of delivery and quality of the goods is key. You will want a robust set of warranties concerning the quality of the goods and/or services. You may want the ability to inspect and reject or return the goods. You will want certainty as to when title and risk in the goods passes to you so that you can ensure that your insurance coverage is adequate. You will want to obtain minimal limitations on the liability of the supplier and to try and negotiate a high cap (if any) on any limitations of liability.
It is a common misconception that terms and conditions are just a boilerplate document that can be run off a printer. Certainly, standard sets are easily accessible via the internet, but they will be of little value if they do not cater specifically to the business and the goods and services being sold and they could end up costing the business much more in the long run.
Clear and well-documented B2B terms and conditions for the provision of goods and/or services will establish a legally binding contract between the supplier and the customer, which can help to minimise the chance of a legal dispute and make it much easier to identify whether a party has complied with the terms and conditions or whether there has been a breach of contract.
Ultimately, it is far more cost-effective to have a robust set of terms and conditions to reflect your business’s needs than to be involved in lengthy and costly litigation further down the line due to the terms and conditions of the contract not being documented or properly documented.
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