Strong Terms and Conditions, to Protect Your Business!
Strong Terms and Conditions are essential to limit legal risks and establishing a clear and professional relationship with your clients. Carefully drafting and properly sharing them is key.
Well-structured and strong terms and conditions not only set the rules of engagement, but they also form a critical part of your overall risk management strategy.
Don’t leave your business exposed. Make sure your legal foundation is as strong as the services you deliver.
Why Strong Terms and Conditions Are Essential
You might be wondering why an insurance broker like us pays attention to terms and conditions. Our job is all about identifying and managing risks, both insurable and non-insurable.
Well-drafted terms and conditions also protect your business against legal and financial risks. They help you not only to limit liabilities but also to keep control over your business operations.
Limit Your Risk with Terms and Conditions
Imagine you make a mistake in your design or the delivery of your services. This could become very costly. Ideally, you have professional indemnity insurance and/or general liability insurance, and the problem seems covered.
But what if there is no coverage, or only limited coverage such as in cases involving “custody situations” or poorly delivered work? That’s when it becomes crucial that you’ve limited your liability in your terms and conditions. If you haven’t, a claim could threaten the very survival of your business.
What Do Terms and Conditions Cover?
Terms and conditions make it clear what both you and your client can expect. They define agreements on payments, mutual obligations, and liability. Think of limiting your liability in certain situations or setting clear payment terms. Without clear agreements, misunderstandings can arise, leading to delays and additional costs.
Please note: stricter rules apply in B2C situations. There are “blacklists” and “grey lists” of clauses considered unreasonable. However, this article focuses on B2B agreements.
Don’t Have Terms and Conditions at All?
Then you’re subject to general legislation. In B2B contracts, you have much freedom to make your own agreements, as long as they are reasonable and fair. You may, for example, exclude certain risks, provided the law doesn’t prohibit it.
But beware: if you exclude too much and your client ends up with almost no rights, this can backfire. Clients may walk away—or worse, in case of a dispute, discover they have virtually no rights. An angry ex-client is never good publicity.
What Are the Pitfalls?
Unclear or incomplete terms and conditions can lead to disputes and legal conflicts. These cost time and money and may result in lawsuits or claims. So make sure your terms and conditions are clear and easy to understand. In case of a dispute, any ambiguity will often not work in your favor. Always have a legal expert review your terms.
Another common mistake we see is in how terms and conditions are shared. No matter how well-written they are, if you don’t deliver them properly, they can be declared invalid—and then they’re useless. Make sure to share your terms correctly, for example when sending a quote or concluding a contract.
But How Do You Share Terms and Conditions the Right Way?
- Attach them to the quote or contract, either as an appendix or as an integral part of the document.
- Provide a direct link to the terms online, so your client can access them with a single click.
- Do you work with the same client regularly? You may refer to previously shared terms, but note: you must be able to prove that the client actually received them. When in doubt, ask a lawyer for advice.
Important: Merely referring to a page on your website, mentioning applicability verbally, or citing it in an email is never sufficient.
Our Most Important Tip
Make sure you can prove you shared your terms and conditions properly. Save outgoing emails or combine your terms with your quote or proposal. This can prevent problems in the event of a dispute.
Avoid Legal Surprises with Strong Terms and Conditions
Get in touch with us for advice! We’re happy to help.
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