Don't underestimate standard Terms and Conditions by Frankie Tierney, CEO, Herrington & Carmichael LLP on 29-Jan-2013

It is understandably easy to be so concerned with winning the business or finding the supplier you want at the cost you want, to forget about checking those pesky standard terms and conditions (T&Cs). Normally printed on the back of order forms, generally in smallish print, they are often the last thing people want to worry about.

Whilst all goes well between the parties and everyone is happy, there is rarely any need to consider the point.

Unfortunately, it is often too late to sort things out when the first time they are looked at is because something has gone wrong. The usual position is that it is the last set of conditions provided by one party to the other that will be regarded as the terms that apply to the contract. Thus if you issue a purchase order when ordering goods and your T&Cs are on the back, but the supplier then issues his own order form for you to sign and return to enable the order to be processed, the T&Cs on the back of his order form become the contract terms in place of yours.

You should try and ensure that you check the other party’s T&Cs and, if you think they are too much in favour of the other party, make it clear, even if you end up using their Order Form, that the order is on the basis your T&Cs apply and supply a copy. Clearly, market forces will dictate how the other party will react to that and commercial reality sometimes has to trump the legal niceties. At least you will be making an informed decision as to whether to take the risk.

Too often there is no paperwork at all, eg. orders placed through an exchange of e-mails or over the phone and the paperwork never actually gets sorted out. If you are supplying goods or services you should always try and ensure there is an Order Form with your T&Cs on the reverse signed by the customer before any goods are dispatched or any services provided. The front of the Order Form should clearly confirm that your T&Cs are on the reverse. Make sure the 'small print' is not too small and highlight any exclusions or terms limiting liability.

The case of Allen Fabrications Ltd –v- ASD Ltd [2012] illustrates the problems that can arise.

A steel fabricator entered into a contract to build a steel platform for its client. Later on, one of the client’s employees fell off the platform (and claimed damages from his employer) and the client sued the fabricator on the basis it was liable. The fabricator pointed to its T&Cs printed on the back of its invoice which limited liability to the price of the goods supplied. It also argued that its standard T&Cs must have applied as the client would have had to have signed its standard Order Form for the order to be processed. In fact the signed order form could not be located. Fortunately for the fabricator, the Court agreed that its T&Cs were the contract terms as it was satisfied there had been a signed order form, albeit it had subsequently been lost.

For more information, please visit: www.herrington-carmichael.com

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