General terms and conditions are an indispensable part of doing business, especially in a business context. They form the legal foundation of business transactions and provide protection in case of uncertainties and potential disputes - a legal necessity, in other words. What exactly are the benefits of general terms and conditions and where are the pitfalls?
The usefulness and purpose of general terms and conditions
General terms and conditions contain standard rules for any agreement you make with customers and suppliers. They provide clarity on mutual rights and obligations and can include topics such as payment terms and methods, (limitation of) liability, guarantees and delivery terms. With good terms and conditions, you prevent misunderstandings and offer yourself legal protection in case things do go wrong. They also make the process easier because most agreements are already fixed. In addition, general terms and conditions help maintain a healthy cash flow by including, for example, clear payment terms and collection procedures. You can also include a retention of title in general terms and conditions, so that you remain the legal owner of the products you supply. If payment is not forthcoming, clear terms and conditions allow you to take action faster and more efficiently, for instance by collecting the products you have delivered.
Common pitfalls
One of the biggest pitfalls is that general terms and conditions are often drafted too broadly or too narrowly. They should fit the specific risks and processes within your company. Furthermore, it is important to apply the conditions properly: you have to make them available to your customer in the right way before or during the conclusion of the agreement. This listens closely. If you don't do it properly, a customer can put your general terms and conditions aside. General terms and conditions regularly become outdated. Legislation and business practices change, and it is essential to review your terms and conditions annually and adapt them to the latest legal and commercial developments.
Summary and tips
General terms and conditions provide protection and ensure clear agreements. They should be relevant, up-to-date and correctly applied in any business agreement.
Tips:
- Review your terms annually to ensure timeliness and relevance.
- Tailor the terms and conditions to the specific products or services your company provides.
- Ensure validity by making the terms available to your customer in a timely and proper manner.
- Seek legal advice to ensure your terms and conditions are in line with the latest legislation and your business.
With clear, up-to-date and well-aligned general terms and conditions, your company is stronger in business transactions.
Written by Frank Laagland and co-writer Bryan Uitman/ Law & Pepper Lawyers
