Why and How Do Charities Need to Be Careful About the Terms of Their Contractual Arrangements? 
Although charities are not-for-profit entities, they are a form of business undertaking. When they are being set up, and subsequently during the whole of their existence, both large and small charities often need to enter into a variety of commercial arrangements with private and public sector organisations.
When purchasing goods or services, a charity does not have any special legal protection such as that conferred by the general law on consumer purchasers of goods or services.
When selling goods or services or entering into any other types of contract with others, a charity’s legal standing is similar to that of a for-profit business entity – the law does not confer on a charity any legal exemptions of privileges by virtue of its charitable status.
Whether engaged in selling or purchasing any goods or services, any charity needs to minimise the legal risk arising from any such transaction by ensuring that the terms of the contract concerned are not unreasonable, are not ambiguous, and that the charity is able to meet its commitments under the contract.
As a charity, it has a duty to protect its assets and minimise actual or potential legal liabilities as far as possible. It follows that, generally, it should seek to avoid taking the types or levels of risk that some for-profit private enterprises might properly take.
The following pages give examples of a variety of contractual arrangements that charities typically might enter into with others. In each case there are links to relevant document templates and guidance notes.