Monday 15 April 2019

"All At Sea!" - Terms and Conditions of Business

Author Tfioreze
Licence Creative Commons Attribution-Share Alike 3.0 unported
Source Wikipedia "Ocean"

Jane Lambert

Do you remember the fuss over Seaborne Freight when the press found out that its terms and conditions were like those used by takeaway food delivery services?  That happens more often than many would think.  Sometimes it is the fault of the draftsperson who recycles terms he or she has used for a previous client.   Other times, a client lifts the terms from a similar company's website in an attempt to save legal fees.

It is never a good idea.  For a start, terms and conditions are likely to be protected by copyright as original literary works.  Secondly, it is unlikely that clauses meant for one business will be entirely suitable for another. It is a bit like wearing clothes that have been snatched from someone else's washing line.

The primary function of terms and conditions is to regulate risk.   That is not just the risk of liability for loss or damage resulting from something going wrong.  It includes other risks such as the risk of non-payment, non-acceptance of delivery and customers' or suppliers' insolvency.   However, terms and conditions will not exclude or mitigate all risks.  For instance, S.2 (1) of the Unfair Contract Terms Act 1977 precludes exclusion or restriction of liability for death or personal injury resulting from negligence by reference to a contract term or notice.  Liability for other loss or damage can only be excluded or restricted by reference to a contract term or notice only if and in so far as it satisfies a requirement of reasonableness.

Terms and conditions can be compared to the keep of a medieval castle.   The moat keeps out most undesirables such as wild animals and sturdy vagabonds, and the curtain wall keeps out many of the rest, but the last line of defence is the keep.  Best practice can be compared to the moat, insurance to the curtain wall and the terms for those liabilities against which it is impossible to insure.

A good draftsperson will draft his or her terms and conditions with the company's business plan in one hand and its insurance policy in the other.  Ideally, he or she will have spent some time with the company to understand its business, identify the risk areas and ascertain ways of alleviating them. Such an exercise will not be as cheap as lifting another set of terms off another company's website and altering the names but it should be a lot safer and hence more economical in the long run.

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