HOW TO DEVELOP TERMS OF TRADE FOR YOUR BUSINESS
To develop clear, concise terms of trade you’ll need to know what to include and how best to word your purchase process so you and your clients or customers are always on the same page.
What are ‘terms of trade’?
The phrase ‘terms of trade’ describes the contractual relationship you and your customer or client enter into whenever a purchase is made.
Terms of trade usually involve a written contract and describe the legal obligations and duties of both the supplier and the customer. Essentially, they exist to legally manage the relationship between both parties
Why does my business need them?
Any business selling goods or services should have clear terms of trade for four key reasons.
Terms of trade make things easier for you and your customers because they legally standardize every transaction. It means any repeat customers will get used to the same purchase process every time, and you won’t have to spell out a new set of terms for every trade.
As long as your terms are well drafted they also ensure contractual rights and obligations are set out well for every single customer. They also help protect you as a business owner by limiting and spelling out your own liability.
It’s important for you and your customers to be on the same page for trades and purchases. Terms of trade help to clarify the rights and obligations of both parties to build mutual understanding.
Terms of trade help with disputes too, forming a framework for resolution and potentially saving you as a business owner from expensive litigation.
Terms of trade checklist
Here’s what to include and consider if you’re thinking of developing or updating terms of trade for your business.
- Take the time to familiarise yourself with the Consumer Guarantees Act 1993, the Contract and Commercial Law Act 2017 (which contains the now repealed Sale of Goods Act 1908) and other relevant statutory consumer warranties so you know what rights your customers have when making a purchase.
- Even if your business has terms of trade in place, they might be out of date with current legislation if they were drafted before 2014.
- Include definitions of words and phrases wherever possible. By clearly defining major terms you’ll minimise the risk of any misunderstandings and subsequent disputes.
- When you’re contracting out, make sure to draft your trade terms in line with what’s currently considered fair and reasonable by the courts.
- Clearly set out in writing any obligations and the consequences of neglecting them for both you and your customers to avoid confusion.
- Keep information about prices and payments straightforward and unambiguous. Your terms of trade should also reserve the right of the supplier to cover any potential debt collection costs.
- Any information dealing with delivery should be clear and concise too. It’s also a good idea to pinpoint when in the transaction process legal ownership (and therefore liability) passes from you as a supplier to your customer.
- Consider incorporating terms to deal with any specialised areas of the law that are relevant to you and your business (e.g. intellectual property law).
- Remember to clearly specify if any prices include GST and repayment dates in your terms of trade.
How K3 is helping business owners with terms of trade
At K3 we draft terms of trade for any business selling goods or services, focusing on clarity and legal language that’s easy to digest.
This approach ensures both you and your customers understand one another, and means we can tailor any language or inclusions specifically to you and your clientele.
Take one of our past clients for example – a bricklayer wanting to protect himself and his business with clear terms of trade.
Initially we drafted a complex set of terms for him to use. We then sought feedback from him once they had been in use. While they were legally sound and correct, he found that they weren’t written in a way that was easy for his clients to read and understand - so we went back to the drawing board.
By responding to his feedback, we were able to write simple, watertight terms of trade created with his specific customers in mind.
No one knows your business like you do, so we collaborate with you to develop terms that work where they should.
For more on terms of trade or to book a consultation, get in touch with our team by filling in the form below.