LEGAL MATTERS Terms of engagement
There is no set format to the way resellers take orders, meaning that the use of standard terms and when customers need to accept them can be a hot issue, explains Martine Nathan, Partner at Teacher Stern Solicitors.
of Legal Matters. One area that is particularly prevalent is in relation to the use of standard terms and when customers need to accept them. Here, we set out answers to these commonly posed queries.
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What priority should be give to the standard terms and conditions of business as part of our sales process? Standard terms and conditions are often given a low priority by companies and may only be given detailed consideration when a dispute arises. Often this will be too late. It is not unusual for a sales department to be issuing quotations or processing orders using terms that are out of date, unsuited to the company’s business needs or simply copied from terms used by the company’s competitors. Commonly, if sales staff are not following proper contracting procedures they may even be contracting on the other party’s contractual terms, because better trained purchasing departments have succeeded in substituting their own terms and conditions. Time must be spent in ensuring that the terms and conditions are up to date and, once this exercise has been completed, ensuring that all of the sales
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team are properly trained on the use of the terms and conditions and at what point they need to be accepted.
At what point should standard terms be incorporated into the contract with the customer in order to be binding? It is an unfortunate fact that time spent in perfecting your standard terms will be wasted unless a proper procedure is in place to ensure that they will be effectively incorporated into your contract with the customers. Contract terms cannot be introduced after the contract has been entered into. This means that the all too frequent practice whereby sellers seek to impose their standard terms by printing them on the back of an invoice will generally be ineffective to incorporate such terms into the contract. Commonly, because the invoice will not usually be despatched until some time after the time the contract would have been held to have been made. Similarly, where a customer agrees to place an order with your business by telephone or email, then it may be too late subsequently to send out a confirmation of the order with the terms and conditions attached to such confirmation. The customer needs to be aware that it has accepted the terms and conditions at the point of actually agreeing to place the order. To account for
Martine Nathan
this it must be clear, and the sales procedures in place must reflect, that prior to the customer agreeing to proceed with the order they have had access to the standard terms and conditions and can actively acknowledge and accept those at the point of placing the order.
How should we incorporate the standard terms and conditions practically when our sales process allows orders to be taken in different ways? To maximise the chances of successfully incorporating your standard terms in the contracts with customers you must ensure that your standard terms are brought to the attention of the customers at the earliest possible opportunity. Common ways of achieving this include setting out the standard terms in brochures, catalogues, other publications and on any quotation forms etc. Where orders are taken over the Internet or by email include an acceptance box
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Marriot St. Pierre, Chepstow,Gwent. 16th June 2011
which the customers actively needs to tick. This should acknowledge sight of and acceptance of your standard terms and conditions. To actually afford the customer the chance to read and review the standard terms, include a link (prior to the place where an order may be made) through which the standard terms may be accessed. However good the process is, this will only be as effective as the training of the sales staff so that such individuals are made fully aware of the company’s procedure.
There is doubt as to whether a customer was provided with the terms and conditions prior to placing an order. Can we imply that the terms and conditions are binding? Where a customer was not provided with the terms and conditions prior to placing an order and that customer does not accept that they are binding, it may be possible to convince the customer (or the court) that such terms and conditions have been incorporated as part of a course of dealings between the parties. In certain instances the courts have been prepared to hold that certain terms are incorporated where, as a result of their consistent use in previous transactions, the reasonable expectation of the parties is that those terms will apply to the particular transaction in question. If you
wish to try and establish that there has been such a course of dealings you would need to show that there has been regular trading between you and that particular customer and that the trading was consistent (ie, previous trading must have been on the same terms and a consistent procedure must have been followed). On the basis of what is a stringent and somewhat uncertain test, which must be established before the court will hold that the terms have been incorporated by a course of dealing, it is clear that this is an argument of last resort. It is no substitute for proper contracting processes.
The specific issues around the incorporation of your terms of business should be considered with advisers to ensure they are being properly incorporated into the contract at the right point. There are also regulations and further legislation that need to be taken account of when preparing or amending any terms and conditions. These include issues around the enforceability of any restrictions on or exclusions of liability, and ensuring you comply with the distance selling regulations where orders are being taken by post, phone or email. These are all areas that are worthy of their own separate discussion and analysis. n
For more guidance contact
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COMMS DEALER MARCH 2011 45
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