The importance of ensuring that you have binding agreements in place, which reflect your business requirements and protect you in the event that things go wrong should not be undervalued.
Businesses are ultimately sales focused, and reaching business agreements on as amicable and efficient terms as possible is clearly beneficial. The need for agreements to be in writing can, therefore, seem unnecessary and cumbersome. After all, agreements are, in reality, often only really required when things go wrong. If things do go wrong, and an agreement is not in place, then your position could be severely prejudiced.
Whilst this problem can, in theory, be easily overcome in hire contracts where standard terms are used (such as those of the HAE or CPA), their applicability is by no means guaranteed. Ensuring that such terms are ‘incorporated’ into the contractual relationship involves a clear understanding on the part of the parties of what terms and conditions apply when the contract is ‘formed’. This could, for example, be the stage at which an order is acknowledged in writing by reference to your standard terms on that acknowledgement. However, the position will not necessarily be clear, unless the parties expressly agree on what terms will apply. Consequently, if you want your terms and conditions to apply, then consider making that as clear as possible and, preferably, agree it in writing.
Sales agreements may be on standard terms or, perhaps for larger transactions, by way of a negotiated agreement. When using standard terms, the above paragraph applies. However, the position can be more complex when you negotiate an agreement.
It is technically possible, but not preferable, to have a binding contract in place based purely on oral terms, or by way of an amalgamation of oral and written terms. Consequently, to ensure that the parties are clear on what terms they are contracting, it is sensible to ensure that all draft agreements and/or associated documents are clearly labelled ‘subject to contract’. That way, until you have a signed agreement in place, the parties are expressly stating that they do not consider themselves to be bound by any other contractual terms.
In our experience, parties can find themselves in the unfortunate position of seeking to recover debts on the back of poorly drafted agreements (whether negotiated agreements, amended HAE or CPA terms, or simply poorly drafted standard terms).
Another common problem is the use of incorrect terms and conditions e.g. using those for the sale of goods for the hiring of goods (or vice versa). Clearly, seeking to enforce inappropriate or poorly drafted terms and conditions can make the recovery of debts difficult or impossible. Avoiding such problems can often be overcome by relatively minimal expenditure on legal advice on the drafting of terms and conditions. Often, legal expenditure - whilst seemingly financially burdensome in the short term - can reap serious benefits in the long term.