By Ben King, Solicitor, Aspiring Law
They’re relatively easily, speedily and cost-effectively constructed, yet a frightening number of businesses leave themselves wide open to the often difficult, protracted and expensive fallout that comes with coasting along unprotected.
I’m talking “Terms of Trade”. Big picture, these documents cover what a business will provide, in what time frame and the expectations around costs and payment by setting out the essential terms under which you do business. In all, they should be one of the most important tools a business has in its risk management kit.
If you’ve never got around to implementing Terms of Trade, BizClub’s made it super easy. As part of your membership, you have access to a range of free templates to get you started on key business documents, including your terms of trade.
It can be a short, concise document that covers your bases, and it doesn’t have to cost the earth. When you compare the relatively low cost of putting your Terms of Trade together – especially when BizClub offers a free template to get your started – to the potential costs, stress and time involved in a dispute, it’s a bit of a no brainer.
BizClub’s Terms of Trade template provides a solid starting point, and includes things to think about, depending on the nature of your business. Once you’ve worked your way through it, you’re most of the way there and, from then, the rest tends to be pretty straight-forward and stress free.
Remember, though, that it’s likely that not all of the clauses included in the template will apply to your business and the way you operate. It’s important to use it as a starting point only, and work carefully through each point, asking yourself whether you think it applies, and if it needs to be added to or amended.
Drill down into the core areas your business operates within. Once those areas are identified, you can determine how detailed the specific clauses need to be. The most common considerations tend to be around price and payment terms, orders and acceptance and security.
Whatever you add, amend or delete, a non-negotiable step is having your draft terms checked and okayed by a lawyer before you put them into action. A review of your draft and a bit of a tweak here and there to make sure the Terms of Trade are customised to your business won’t cost the earth – but could save you a pretty penny.
Solidly-drafted Terms of Trade can be worth their weight in gold when a relationship with a customer doesn’t go to plan. If you don’t have an agreement, you can leave your business at the mercy of the person you’re dealing with. Done well, these contracts spell out clearly the rights and obligations of each party, which, ideally, will stop things going sour in the first place and, failing that, provide a clear and well-understood path to dispute resolution. Once your terms are in place, don’t forget to schedule a review at least annually, so that you’re regularly testing your Terms of Trade against the likes of changes to the law or the way your business operates.