You should not even think of starting a trade without first getting a professionally drafted contract or standard terms of business. It is your only protection against bad or unscrupulous customers.
A simple telephone call can constitute a binding contract though you would be foolish to rely on unrecorded and unsigned agreements, even to vary the terms of your standard contract.
A written contract not only enables you to record incontrovertibly what you will do for a customer, it also gives you the opportunity to state how important matters, like method and timing of payment, or settling disputes, will be handled.
But a contract can be a millstone around your business's neck if it contravenes one of the many laws forbidding 'unfair' contract terms. Professional advice should therefore always be sought. It is no good having a sound contract if careless practices, like not checking customers' business registrations, leaves you open to fraud.
The Law society has produced a leaflet setting out a series of questions that you may wish to consider:
Checklist
- Do you have a contract or written terms of business?
- Do you confirm in writing all telephone agreements or changes over the phone to written terms?
- Are you relying on a copy of somebody else's terms which may be defective, inappropriate or illegal?
- Do you know who you are really making the agreement with?
- Do you record the registered company number of the customer or supplier on you agreements?
- Does your contract exclude liabilites for, say, your own negligence?
- Do you know that you - and your customers - have new rights concerning the acceptance and rejection of bought goods?
- Do you always read your supplier's terms of business, including the small, hard to read grey print on the back of their invoices?
- Do you always check out business references?
- Do your terms of business make it unambiguous what you will do, when it will be done, how you will be paid, and what will happen if there is a dispute?
- Do you claim interest on late payment?
- Are you aware of the EU directive on factors and agencies?
- Do you buy consumer goods for your business?
- If you are buying or selling overseas, have you settled whose country's law applies?
- Do you know that tighter laws from the EU on unfair contract terms apply if you sell to the public?
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