It is important for all businesses to trade within set parameters, particularly those businesses which supply goods. A good set of terms and conditions which are incorporated into your sales contract can help you avoid expensive problems.
The general duty on suppliers of goods is to make sure that they are satisfactory quality. It is no defence to a claim that the goods were not of such quality to show that all care was taken to make sure that the goods did satisfy that requirement. In the absence of any agreement to the contrary, this requirement is implied into all sales contracts. The legislation states that goods are of satisfactory quality if they meet the standard that a reasonable person would regard as satisfactory, taking account of any description of the goods, the price (if relevant) and all other relevant circumstances. It is a moot point what a reasonable person might regard as satisfactory, and the legislation is somewhat vague in the means by which a reasonable person might come to that decision. Each case will turn on its own facts, making it very difficult indeed to determine the outcome of any dispute.
Terms and conditions can operate to limit the customer’s expectations and the seller’s liability where the goods do not meet the necessary quality standards. For example, if the supply is of a commodity, the terms could state that the seller is not responsible for any defects or impurities unless apparent from a visual inspection by the naked eye, or limit the seller’s financial liability to a sum perhaps equal to or a proportion of the contract price.
To be effective, the terms have to be properly incorporated into the contract – which means that the customer must have seen them or have the opportunity to see them before the deal is struck. Printing terms and conditions on the back of an invoice is far too late, unless the invoice is sent in advance and the customer’s acceptance of the invoice necessary before the supply is made. Some buyers will respond by accepting, subject to their own standard terms and conditions. Sellers need to be on their guard against this, because if the order is then accepted, it will be the buyer’s terms and conditions which apply.
Note that different terms and conditions may be required for business customers and consumers, as it is more difficult to restrict liability in consumer sales.
Please contact our Corporate Teams if you are interested in having us prepare a set of terms and conditions and giving instructions upon how to ensure that they are incorporated.
Mark Stubbs is a partner and a member of the litigation team in the Truro office of leading South West legal firm Stephens Scown LLP. He can be contacted by telephoning 01872 265100 or emailing firstname.lastname@example.org