Forming Contracts with Customers and Suppliers

Contracting with Customers and Suppliers


Customers  

It may be tempting to deal with your customers on an informal basis but if your business does not ensure that it has a contract in writing with its customers, it runs the risk of misunderstandings, disputes, bad debts, and incurring liabilities of a type/level that the business is not willing to accept.

It is prudent to trade on detailed standard written terms which ensure that customers are fully aware of their rights and obligations from the outset. For many businesses, especially where they provide standard products/services, they will usually trade on such terms. Our Business Folder contains a wide range of standard Terms and Conditions for businesses to use, and for further information, see guidance on Legal Issues for Sales Management here. A set of standard terms can be printed on the back of a standard quotation, order form or other purchase documentation.

Where the customer is a “consumer”, use of suitable standard conditions also helps to ensure compliance with certain consumer law requirements.

We recommend that you take legal advice about terms of supply by your business and also as to how to use those terms.

Suppliers

To minimise the risk of misunderstandings, disputes, and to make clear the type/level of obligations and liabilities of your supplier to you as its customer, your business would be best advised to do business with each of its suppliers on clear written terms.

Suppliers will usually want to trade on their own standard terms, in which case you need to check them very carefully to make sure they are acceptable: they will usually be slanted in favour of the supplier However, where any supply contract is individually negotiated between the supplier and your business, or the supplier agrees to trade on a set of terms of purchase which you propose, that may give you an opportunity to have some control over the terms of supply that you accept.

We recommend that you take legal advice about the contents of any terms of supply to your business and also as to how to use those terms.

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