Many businesses are reviewing their terms and conditions of sale to reflect changes in practice caused by the impact of the Covid-19 pandemic and Brexit. Megan Eaton of Coodes Solicitors’ Corporate and Commercial team outlines five ways this can help a business.
The lockdowns and restrictions put in place during the Covid-19 pandemic have left many businesses vulnerable when they have not been able to fulfil customer orders. As a result, we have been supporting a growing number of our clients to review and redraft their terms and conditions of sale.
Whether you are selling to consumers or providing products or services to businesses, bespoke and professionally drafted terms and conditions can offer protection if things go wrong.
Some examples are obvious: wedding businesses, holiday companies and catering firms have been unable to operate for much of the last year. Many have been left with unfulfilled orders as a result. However, with some staff self-isolating and many workplaces closed, disruption has been felt across sectors and throughout supply chains.
As we continue to adapt to changing guidance and look towards the end of the current lockdown, this is a good time to ensure your terms and conditions of sale are fit for these uncertain times. Here are five reasons why redrafting your terms and conditions could help your business as we continue to navigate our way through the pandemic and we see the impact of Brexit.
1. Saving time and money
Having properly drawn up terms and conditions may involve some effort and investment at the outset. However, it should save considerable time and money in the long term. That’s because a set of bespoke terms and conditions written especially for your business should provide a clear framework for all transactions. This is particularly helpful for repeat orders.
Having terms and conditions that you can use for every sale provides consistency and prevents complication. This helps your business to work more efficiently as you won’t waste time negotiating and setting up each new transaction. Every member of staff should easily be able to conclude transactions on behalf of the business.
2. Protecting your business against future disruption
Although we have a roadmap to recovery, it is likely we will face disruption as a result of the pandemic for some time. Brexit has also created uncertainty and is affecting those businesses that are reliant on global supply chains in particular. It therefore makes good business sense to ensure your terms and conditions of sale offer you some protection against potential difficulties in delivering products or services in the future.
Good terms and conditions of sale should be part of your business continuity strategy. They will also help you secure the right insurance. Your insurance provider will want to see that you are properly managing the allocation of risk and responsibility.
You may want to consider the following:
- Relaxing the time pressure of some of your terms. This could mean giving estimated deadlines or a time frame, rather than a specific date (e.g. delivery within 14 days).
- Introducing deposits or payments at specified milestones of the contract. This could help your business with cashflow while also reducing the pressure on customers to pay the full cost in one go.
- Introducing provisions for the use of third parties. This would enable you to subcontract work that you are unable to complete. For example, you could use a different delivery service if you do not have enough of own drivers available.
3. Giving you an edge on the competition
Before the pandemic, most consumers skimmed over the small print or didn’t read it at all. Events of the last few months have made most people far more concerned with the terms and conditions of sale. This is especially true for holiday lets, tickets for events and any sale that could be potentially impacted by changing restrictions. Customers are therefore more likely to choose to buy from a company that is offering reasonable terms and conditions of sale.
Having fair terms and conditions, which are clearly communicated up front to customers, is more important than ever. Without them you are likely to lose out to competitors.
As we are at risk of future restrictions, you may need to change your existing terms and conditions to ensure your product remains attractive to potential customers. For example, you may need to state that you will offer a full refund, a voucher or a later date, if you are unable to provide the services the customer has paid for. This could either be because of Government measures or because the customer has to cancel due to having to self-isolate.
4. Reducing the risk of disputes
Having well drafted terms and conditions that are reasonable and fair will help protect you against customer disputes. If you are reviewing business contracts, your terms and conditions must meet the requirements of the Unfair Contract Terms Act 1977. If you are redrafting consumer contracts, the Consumer Rights Act 2015 and other consumer protection legislation must be followed, namely that the terms are fair and easy to understand.
At the beginning of the fist lockdown, there was considerable confusion about whether or not customers should be entitled to refunds for holidays, event tickets and weddings. This revolved around the question of whether or not Covid-19 could be classed as what is known as a ‘force majeure’ – a legal term meaning an event that could not have been foreseen. It is unlikely that Covid-19 would be classed as a force majeure as it is now known so is a foreseeable risk. However, this does not prevent you for setting out in your terms how you will deal with issues arising due to the pandemic.
5. Helping you recover post-lockdown
If your business is currently closed or disrupted by the lockdown, you are likely to be focused on future recovery. Redrafting your terms and conditions of sale as part of your business continuity strategy should be part of that process. This will involve reviewing terms and conditions to ensure they are fit for the challenges your business, suppliers and customers continue to face. This could include further local or national lockdowns and staff shortages.
We are also supporting many of our clients to include Brexit clauses in their contracts. This is particularly important if you trade overseas or are reliant on overseas suppliers.
Post-lockdown recovery will not just be about minimising risk though. Getting advice should also help ensure your terms and conditions of sale are as attractive as possible to potential customers. This will support your business to make the most of new opportunities and potential growth.
For advice on these issues, please contact the Corporate and Commercial team: 0800 328 3282 or email@example.com