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          Are your terms and conditions of business fit for purpose?

          Date: 8 February 2017

          Date: 08/02/2017

          When was the last time that you reviewed your terms and conditions of business or considered the procedure for ensuring that they govern your contracts? There have been numerous recent changes in the relevant law and the technology that businesses use to form contracts. Are you confident that your terms and procedures still represent best practice? 

          The key points for you to consider and take advice on are:

          1. Incorporation

          There's no point having perfectly-drafted terms and conditions unless they form part of every contract.  DWF can review your methods of forming contracts and advise on the most appropriate method of incorporating your terms.

          2. Price and payment

          There are many of issues to consider:

          Is it useful to make time of payment of the essence?  Should you exclude the customer's right of set-off?  If so, is there a risk that this may be unenforceable under UCTA.  Should you rely on the Late Payment of Commercial Debts (Interest) Act 1998 (LPA) or include a contractual interest rate?  Can you "mix and match" the LPA provisions and contractual rights?

          3. Retention of title (ROT)

          Drafting a good ROT clause is about protecting your business, while not making the clause unenforceable.  For example, do you want to include an "all monies" clause so that title only passes when the customer pays for all the goods that you supply?  This risks making the clause unenforceable if not carefully drafted.  You also need to consider what the customer does with the goods, e.g. selling them on or using them to make other goods.

          4. Penalty clauses

          The Supreme Court recently set out a new test for when a clause that provides for a remedy such as interest on late payment is an unenforceable penalty.  You should review all such clauses to check that they still work under the new rule and whether they could be redrafted to offer more protection.

          5. Variation clauses

          While your terms probably include a provision that the contract can only be varied in writing, recent case law has confirmed that this can be overridden by the parties' oral agreement or conduct.  Have you trained your team on this risk?

          6. The Modern Slavery Act 2015

          Have you heard of this act?  If so, did you assume that it's nothing to do with your business?  This is a common misconception and you should think again.  All large commercial organisations carrying on business in the UK must publish an annual "transparency statement" setting out the steps they have taken in the previous year to ensure that their business and supply chains are slavery-free.  If caught, you need to update your terms of purchase to obtain appropriate warranties from your suppliers.  You should also consider whether to update your terms of sale to give your customers suitable warranties.

          7. Unfair contract terms

          Are you aware that the Unfair Contract Terms Act 1977 doesn't just apply to clauses where you attempt to exclude or limit your financial liability, but also to clauses where you purport to give yourself the right to evade responsibility for delivering the goods or services which you have contracted to supply?  This can include tolerances, get-outs for late delivery, force majeure, entire agreement clauses, or clauses that restrict the other party's ability to exercise its rights.

          8. The Consumer Rights Act 2015 (CRA)

          If you contract with consumers, have you updated your terms and conditions to comply with the CRA?  This has given consumers new rights and remedies and created a new category of "digital content" alongside the existing categories of goods and services.

          9. Data protection

          In May 2016, the EU adopted the General Data Protection Regulation (GDPR), which member states must comply with by May 2018. Despite the recent Brexit vote, this is still important because: (1) it is likely that the UK will still be an EU member in May 2018; and (2) following our departure, it is likely that UK data protection law will mirror EU law so that UK businesses can continue to trade with EU customers. Accordingly, you need to update your terms to comply with the GDPR.

          DWF's Commercial team has extensive experience of drafting, reviewing and updating terms and conditions of business.  Contact Craig Chaplin to discuss your requirements on 0161 604 1642

          We also offer fixed price support to help you comply with your obligations under the Modern Slavery Act 2015. Take a look at what services we offer or email ModernSlaveryEnquries@dwf.law

          Related people

          Craig Chaplin

          • Partner // National Head of Commercial & Competition