Despite the fact that Terms and Conditions (Ts & Cs) represent the basis for every business to trade, very few companies have taken the trouble to have Ts & Cs drawn up that are right for them. As Stephen Roche, Chief Executive of Pellys LLP explains, the secret is to start right and stay right.

"Many companies start by copying somebody else's Ts & Cs in the belief that this will give them some degree of protection. Whilst this may be true in a handful of cases, there are many more situations where copying somebody else's Ts & Cs is almost guaranteeing that a future problem will be laying in wait."

As a means of assessing the appropriateness of your Ts & Cs, Pellys LLP has drawn up its 'Ten steps to get Ts & Cs right'.

1. It's not boring, it's your business
   Spending time and money looking at Ts & Cs may seem boring, but this is your business and your livelihood we're talking about. Ts & Cs are serious issues so don't be put off, get them sorted!


2. Specify payment terms
   Assuming that you expect to be paid, it is reasonable that you specify the terms that apply. Anticipate potential delays caused by companies that are adept at using excuses by ensuring that:
   
   Payment is due xx days from date of invoice or delivery
   
   Make time of payment 'of the essence' (a legal phrase that puts you in control if you need to terminate a contract because of non-payment)
   
   Exclude the customer any right of set-off (this means he still has to pay even if there is a dispute)
   
   Include an acceleration clause (this means that if you have several invoices awaiting payment, they all become due immediately if late payment of the initial invoice is experienced)
   
   Include your right to stop future delivery of any outstanding orders at once if any invoice is paid late.
   
   
3. Include interest claimable on outstanding invoices
   Legislation has provided for you to claim interest on unpaid invoices and you should exercise your rights. But the rules differ depending upon if you are dealing with businesses or consumers:
   
   Businesses: You can claim as much as 8% above base by specifying a figure, otherwise the statutory interest will apply. In any event, do not specify a lower figure
   
   Consumers: You must state that you will be charging interest (normally the maximum is 4% above base)
   
   In either case, include a clause that allows you to claim legal expenses plus any other related costs should you need to pursue payment


4. Be clear about delivery
   Naturally you need to establish where the goods/services are to be delivered and who is responsible for acceptance; more importantly you need to establish that the date/time of delivery are not 'of the essence', otherwise you run the risk that the customer may cancel an order for failure to deliver on time. You also need to state whose responsibility is insurance of goods in transit.


5. Limit your liability
   You do not want a continuing liability should goods subsequently fail or become defective so it is important to word this aspect correctly. It is also important that the clause is 'reasonable', otherwise it may not be enforceable.
   N.B. You cannot use such wording in contracts with consumers.


6. Include a retention of title clause
   Retention of title is important because it protects you in various ways; retaining title until the goods are paid for means you can get them back in the event of non payment, inclusion of an 'all monies' clause means that if delivering various goods on separate invoices they all have to be paid before title passes. Use of a 'storage' clause eliminates any subsequent arguments about whether title has passed or not.


7. Be consumer specific where appropriate
   Consumer rights are different to businesses, so if you are dealing with consumers, have Ts & Cs that are specifically for them.


8. Whose law is it anyway?
   With so many companies exporting their goods, the opportunity for international disputes has grown. Make it clear that your Ts & Cs are to be interpreted as per English Law and all parties will submit disputes to English courts.


9. My terms rule OK
   Take steps to ensure that your Ts & Cs are printed on everything appropriate and that your customer has seen and agreed to them BEFORE an order is placed and accepted.


10. Use a professional
    Our ten steps are not exhaustive and should not be seen as a sure way to avoid problems. Ts & Cs are a legally binding contract, get a solicitor experienced in commercial matters to help draw up yours.