More on Terms of Trade – Dukesons Business Law – Contract Lawyer – Business Lawyer

May 2021

This Blog isn't legal advice – if you need legal advice on any contract law or any other business law or commercial law issue, please contact me. I'm a business lawyer (commercial lawyer) who provides advice on a wide range of business law or commercial law issues.

NEWS FLASH: Terms of Trade are your core business document. What’s provided in them must be practical and reflect how YOU carry on YOUR BUSINESS as well as covering the many legal issues that can arise.

That shouldn’t be news. As self-serving as it may sound, whether you draft Terms yourself or copy another business’s Terms of use some form of basic online template, you will never be able to produce Terms of the same quality than an experienced business lawyer can. (See other blogs on my website as to Terms of Trade.)

Further, if you think that Terms should be cheap, you have no understanding of the importance of your core document or of the expertise require to make the Terms as robust and effective as possible.

Here are some issues that can affect the complexity and cost of preparing Terms:

  • Do you supply goods or services to private consumers or to business customers or both?
  • If you supply to private consumers, the Consumer Guarantees Act 1993 (CGA) and the unfair contract terms regime (UCTR) of the Fair Trading Act 1986 (FTA) will apply. As to the latter, each clause of your Terms needs to be considered as to whether the term may be unfair.
  • If you supply to business clients, both the CGA and the UNCTR may apply. If they do, if it’s fair and reasonable to do so, you can contract out of the CGA but not the UCTR (though a different standard of what is fair/unfair may apply in relation to business customers than in relation to private consumers).
  • In relation to business customers, if it’s fair and reasonable, you can contract out of some provisions of the FTA e.g. as to misleading and deceptive conduct.
  • Do you supply goods on credit? If so, the Personal Property Securities Act 1999 (PPSA) may apply. If you haven’t heard of the PPSA, you had better get up to speed quickly. Do you get customers to sign your Terms (usually through an application for credit or an account application) or do you enable customers to agree to Terms Online? If the latter, there are a number of issues including as to whether you want to included terms as to the use of your Website and the fact that to deal with the PPSA, you need your customer to assent in writing to your Terms.
  • Are there circumstances where you require a guarantee?
  • Do you want to be able to do credit checks, send marketing information, etc? If so, the Privacy Act 1993 will apply (but not to Companies or Incorporated Societies).

Those issues are big picture issues. Then there are all of the clauses that deal with the detail, like price, quotes, acceptance of goods, delivery of goods, risk and insurance in relation to goods, what warranties will be given (depending on whether CGA applies), liability and so on – often, the template clauses relating to these matters need to be amended to cater for how your business is carried on and what are your expectations and requirements.

There’s also the issue as to who can sign or agree to your Terms for the customer. This isn’t as simple as you might think – you need to know the rules, so that you can decide how far you will go in complying with the rules.

I can understand that costs are important, especially to small businesses that are struggling or to start ups. My law practice is a small business and I run it. But when you ask a lawyer to draft documents or advice, you are in effect seeking insurance i.e. you want safety, security, in so far as this can be provided. Similarly, your Terms are intended to provide you with insurance. If you want the experience and expertise of a lawyer to provide you with insurance in relation to your core business document, you should expect to pay a reasonable fee given that the exercise is far from simply filling gaps in a template.

Alternatively, you can go down the do it yourself route or the cheapest possible route. Having said that, I have yet to see any Terms that a client has presented me with, having gone down those routes, that hasn’t required substantial re-drafting, sometimes at more cost than had the client asked a lawyer to do the work to begin with.

The tone of this blog may seem a little harsh, and again, possibly self-serving, but it never ceases to surprise me how many businesses think that Terms of Trade should be a low cost item and that anyone can draft them. Surely it's important to invest in getting your core business document in shape.

Please:

  • don’t hesitate to contact me if I can help you with reviewing your form(s) of contract or with any contract law or other business law or commercial law issue;
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Telephone: +64 9 379 4556 Mobile: 021 404 306. Fax: +64 9 379 4557 Email: steve@dukesons.co.nz