Why does a business need Terms and Conditions?

A terms and conditions of business document for customers is one of the first legal documents that a business should put in place. For more information on why this is so important, read our free explanatory guide below.

So what exactly are terms and conditions of business?

Terms and conditions of business are simply an agreement that forms the basis of a business relationship with your client/customer. One party agrees to do something in return for something else (usually payment for goods or services where a business is concerned). The agreement sets out the terms on which you are prepared to do business e.g. time for delivery and payment.

What do they do?

It is true that a business could rely on a verbal agreement or exchanges of correspondence but these can be difficult to enforce if there is a disagreement. Terms and conditions provide certainty for both sides in one document, which will protect your business and minimise the potential for disputes.

terms and conditions of businessTerms and conditions of business have a dual purpose of providing a business with legal protection and also giving it credibility. The agreement can outline your customers’ rights and include sections on dealing with complaints and refunds.

Ideally, terms and conditions should be concise but cover all of the main issues specific to your business and how it deals with customers or clients. Rather than a cost, terms and conditions should be viewed as an extra insurance policy that can limit liability for certain claims by customers.

If the business that is carried out by the company for customers is important to that company, the terms and conditions of business have to be legally enforceable. This means getting a lawyer to do it. Conditions which may appear to be reasonable and common sense may not stand up if things go wrong later. Having to go to court because the lawyers couldn’t agree on liability earlier when terms are not watertight is a lot more expensive than the right advice early on.

Last but not least, a business needs to make sure that they use terms and conditions correctly to ensure that they can be relied on where there is a dispute. This means bringing them to the attention of the customer before the sale is agreed and not on the back of an invoice, for example.