Latest News / The importance of written terms of trade
Do you provide goods and services to customers without any written agreement about the terms on which the goods and services are supplied, including payment and when it is due?
This can lead to misunderstandings and disputes that can be costly and time consuming to sort out.
Although a contract for goods and services can be verbal and enforceable, if not in writing, there can a lack of certainty about agreed terms.
The following fictitious example highlights some of the problems which can occur when no written terms or contract is agreed with the customer.
John is an experienced plumber. A good customer has given John's name to a developer who wants some plumbing work done on three properties. John meets with the developer, agrees to do the work and they shake hands on the price.
To complete the work, John buys a large amount of plumbing supplies and quickly completes the work. He sends an invoice stating that payment is due seven days from the date of invoice. Nothing happens. John contacts the developer who says that he has issues over the quality of the work, the cost increases over the price agreed and that he usually pays invoices accepted on the 20th of the month following the date of receipt and not seven days from the date of invoice.
Not only is there no agreement as to when payment is due but there is also no procedure for dealing with disputes relating to the quality of work and the cost increases.
Enforcement of the contractual rights in these circumstances where very few terms were agreed up front and understood by the parties can be costly and time consuming.
John should have had general terms of trade on the back of his quotation which could be read and agreed on by the developer.
If John had realised that these issues would arise at the beginning he would not have undertaken the work as he has ended up working for much less than his usual rate and his incurred debt to get the work undertaken and now faces costly legal proceedings to enforce payment.
- This article is by Richard Neave, a commercial law specialist partner at Duncan Cotterill Lawyers.
Disclaimer: the content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.
