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Question

What is the best way to ensure that contracts with my commercial clients are dealt with on my own terms and conditions?

Answer

Although you don't need a fancy written agreement for a contract to be legally binding, having written terms and conditions may help to avoid costly disputes when things go wrong.

The first and most obvious point is that, generally, terms and conditions that appear only on the back of your invoices are not worth the paper they are written on. Once a contract has been formed, neither side may unilaterally vary those terms or introduce new terms. Invoices are normally presented only after the contract has been agreed and performed, so it would be too late to introduce terms. Therefore, if you want to rely upon terms that are favourable to you, it is important that those terms are communicated to, and received by, the other party prior to any agreement being concluded.

Problems may arise when the other party you are contracting with also has written terms and conditions. Their terms will be more favourable to them, and are likely to be in direct conflict with your own terms. The question then arises: whose terms prevail?

Any contract should include a term along the lines of: 'These terms supersede and override any and all contractual terms and conditions of the other contracting party howsoever and whenever communicated.' Fine, unless the other side's contract has a similar clause.

Such an 'overriding clause' may prevail, providing you can convince a court that the contract was concluded on that basis. However, problems often arise, for example, where you purport to deliver goods on your terms and the recipient gives an acceptance note stated to be on their own terms. In such circumstances it is possible that a court would hold the 'acceptance note' to be a counter offer, and your acceptance of that counter offer would be on their terms.

This 'last shot' doctrine could upset even the most carefully drafted contact. Even so, a professionally drafted contract should be seen as an investment, rather than leaving matters to chance.




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Last Updated: Saturday, 23-Jan-2016
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