How are you going to get paid?
The role of your Terms of Trade is to be successful when you sue a client who hasn’t or will not pay.
When starting your own business, there’s one question you need to answer: How are you going to get paid? Having your own Terms of Trade sets out the basis of you relationship with your clients. Set up your Terms of Trade, have them on your website and in printed form on reverse side of your purchase (or works) order forms.
The big mistake most business owners make when establishing their own Terms of Trade is to resort to copying someone else’s Terms of Trade. Using a precedent is a good idea as a start but you need to tailor your Terms of Trade to what you do.
When you discuss services with a client – this is an oral contract. It can be proved upon exchange of emails i.e. confirmation in writing. A faxed or emailed purchase order will also confirm the oral contract.
Sometimes to prove an oral contract over time, if you are dealing with the same person, you can establish a “Course of dealings”, which may be substantiated by emails, quotes, purchase orders which establish the contractual relationship and the terms of that relationship.
The perils of simply copying someone else’s Terms of Trade from their website.
It is only when you try and sue on these Terms of Trade that you discover any flaws in them. The best and riskiest way to test if your Terms of Trade work for you is to issue proceedings/litigate, that is, to sue a client for an unpaid invoice. Even your own Terms of Trade will evolve over time and should be reviewed from time to time as you learn about their practical operation.
Remember the K.I.S.S principle:
Keep It Simple, Stupid – this applies to Terms of Trade.
The role of your Terms of Trade is to be successful when you sue. What you need to be successful is the creation of a contract that can be sued on. This can be your quote with simple terms and a purchase order as confirmation of the agreement of contract. We can help you with that.
What will establishing your own Terms of Trade cost?
As any good Lawyer will tell you – “it depends”. The answer is, any written confirmation of your agreement is useful in litigation.
You can liken it to the cost of comprehensive insurance and the excess you have to pay – how may claims you ever had on your comprehensive policy?
How many bad debts have you had? Most businesses don’t have a lot of bad debt (if they do – they don’t last), but if you have to sue someone you need to give your business a good chance of success by having simple Terms of Trade.
Every set of Terms of Trade are a continuing work in progress. It will depend on the nature of your business and the marketplace that you are operating in. Every commercial area has its own rules of conduct.
Still unsure if your Terms of Trade will protect you? Speak with us today.