Business advice: Legal
Standard T&Cs: Mitigate the risk of future disputes In this article Napthens commercial litigator, James Stephenson, considers the benefits for businesses in having standard Terms & Conditions (T&Cs).
In the early stages of a business’ life, the focus is invariably on developing products to be the best they can be, sourcing a customer base and getting products/services out to market as soon as possible. However, all too often, considerations relating to the long-term future of the business are overlooked in favour of short-term goals and returns. One such issue which may be overlooked is how the business may fare in any future disputes. But focusing on this right at the start of the business journey could save considerable time and expense in the future by reducing the risk and uncertainty which can engulf disputes. Why do you need standard T&Cs? At the outset it is worth considering what T&Cs a business will have in place to govern and regulate future relationships and contracts with suppliers, customers and other third parties. Once in place, these T&Cs can easily be incorporated into future contracts to deal with, amongst other things, fundamentals such as price, payment, delivery, quality, title and risk, limitation of liability, termination and confidentiality obligations. Many important parts of standard T&Cs are driven by purely commercial decisions and the business' sales process mechanics, for instance, payment terms, or how delivery takes place. The benefit of addressing these issues in T&Cs cannot be overstated. Effectively, it allows a business to put its best foot forward with a bespoke set of terms which, if
incorporated into a contract, will undoubtedly put it in a significantly better position than if no T&Cs apply - or if the other contracting party’s T&Cs apply instead. Without any T&Cs in place, the likelihood of a business being bound by the other party’s T&Cs is significantly increased and, no doubt, any such T&Cs will be heavily weighted in favour of the other contracting party. What happens when no T&Cs are in place? If no party’s T&Cs are incorporated into the contract, disputes will be dealt with according to common law and statutory principles, many of which are antiquated and out of touch with today’s ever-changing world. Applying these legal principles on a ‘one size fits all’ basis is rarely satisfactory and seldom fits with a business’ often bespoke and unique approach. Taking the example of limitation of liability, having a bespoke contractual term can be considerably better than relying on legal principles. Limitation of liability is always a
key issue in a contract. Whilst a customer will want as few limitations as possible to apply, and, if possible, to increase the supplier's liability in the event things go wrong, a supplier will want to restrict its liability under the contract as far as possible. A correctly worded limitation of liability clause can seek to place a cap on certain liabilities - or entirely exclude certain categories of loss. But without such a clause and instead relying on common law principles, in the event of a breach of contract, a business could open itself up to potentially unlimited liability for financial loss. By considering and addressing limitation of liability (and other similar issues) at an early stage and having properly drafted T&Cs in place, could ensure a business is not unwittingly opening itself up to claims or liabilities in future which could be avoided.
For advice on this topic or on legal issues affecting your business, please contact SIBA Legal Helpline on 0845 6710277 North West Law firm Napthens LLP is a SIBA supplier associate and Silver Standard Sponsor. The firm has a team of specialists looking after legal requirements of clients in the leisure and licenced trade sector, with clients including Daniel Thwaites Plc and Titanic Brewery. Napthens manage the SIBA Legal Helpline which offers legal advice and guidance on a wide range of legal issues affecting your business, including: General commercial, intellectual property, corporate finance, dispute resolution and litigation, commercial property, licensing, employment law and HR advice. Any enquiry through the helpline will receive up to 1 hour of free legal expertise (if further work is required, you’ll be advised of the appropriate charging structure). Full details of the helpline can be found on the SIBA Members Toolbox.
www.siba.co.uk | SIBA Independent Brewer | Summer 2022
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