How Legally Binding Terms Of Trade Can Save You $1000’s

how-terms-of-trade-help-overdue-accounts

  • Does your business offer credit to customers? (You may not think so but if you deliver goods or services and get paid at a later date then you do offer credit.)
  • Does your business have legally binding Terms of Trade (sometimes called Terms and Conditions)?
  • Do these terms of trade protect you and your businesses interest by covering all potential spurious disputes that can be put forward by customers?

It is not surprising to see how many Australian businesses – large and small – do not have legally binding Terms Of Trade to protect their business. After all very few of us understand the legal repercussions of failing to create and communicate our terms to customers.

But this seemingly small oversight could end up costing you a great deal of money and could even leave you vulnerable to lawsuits in some cases.

So How Do Legally Binding Terms Of Trade Help Your Business?

Proper Terms of Trade will include sections that ensure you are complying with many regulations and government legislation such as…

  • Fair Trading Acts
  • Commonwealth Trade Practices Act
  • Privacy Act 1988

They will also cover many other important, yet often overlooked areas including:

Retention of Title: A Retention Of Title clause is a provision in a contract for the sale of goods, which means that the seller retains legal ownership of the goods until certain obligations are fulfilled by the buyer – usually payment of the purchase price.

Warranty, Returns and Defects: Your terms of trade must clearly state what your warranty terms are, including how long the goods remain under warranty and what your obligations are if the goods are returned because of a defect whilst still within the warranty period.

Cancellation: Develop a clear cancellation policy that explains exactly what both yours and the buyers obligations are if a cancellation occurs.

Recovery of Collection Costs, and Interest: In the case that a buyer does not pay their bill you may need to engage a collection agency such as JMA Credit Control to help recover the funds. In this case you may be left out of pocket if you don’t include a section about recovering collection costs and interest in your terms of trade.

As you can see legally binding terms of trade are very important and failing to include some of the items above could leave cost you a lot of money if a dispute ended up in court and you had no written documentation to support your claims.

One last thing…

You Must Clearly Communicate Your Terms & Have Them Signed By Your Customers

For your terms to be legally binding the buyer must be directed to read and sign them before agreeing to the purchase. It is no good to hide them at the bottom of a quote, invoice or website and expect people to read them. It is your job to ensure they have read and agreed to them first.

At JMA Credit Control we specialise in drafting legally binding Term of Trade that are unique to your business and will protect your interests across all the above scenarios.

Our in house solicitors will ensure they conform to all regulations and legislation and you can be confident that you are protected no matter what type of potentially costly customer disputes arise.

For a FREE, no obligation consultation with one of our specialist please call 1300 272 264 or read more about our Term Of Trade services here.

Written by Richard Thompson

Richard Thompson is the Managing Director and owner of JMA Credit Control and has over 25 years’ of trusted experience. Richard has a wealth of knowledge in Credit Management and Debt Recovery ensuring client’s recovery bad debt quickly and cost effectively.

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