The importance of small print and of curbing your sales team’s enthusiasm
Let’s face it: contract terms and conditions (ts and cs) can be dull, especially for most sales staff who are typically driven by more exciting business challenges, such as closing deals and (on a good day) racking up sizeable commissions.
In a good market, few customers will read the small print, keen themselves to move on to the next thing so what’s the point in stressing over it?
Answer: when a market becomes stressed, people will pore over the ts and cs with an entirely different emotion (ie absolutely interested in the small-print detail), looking for ways of wriggling out of a commitment, or preventing the other side from doing exactly that.
One of the most common problems you see played out in contract disputes is confusion as to whose terms and conditions apply. From your point of view, you need to be sure that it is your ts and cs that are incorporated into any contract you enter into. Both sides may have their own standard ts and cs and it may be that, in the course of negotiations, it was never made 100 per cent clear which set would apply.
Lawyers call this the “battle of the forms”.
If your terms and conditions are not properly incorporated into your contracts, they are not worth the paper they are written on. Another common problem seen in contract disputes is sales personnel overselling a product or service, perhaps desperate in tough times to make sales to save the skin of the company or their own. If authorised staff agree to contracts that are inconsistent with your standard ts and cs, then these additional promises may become part of the contract, overriding your standard terms. This can give rise to significant problems later on, when one or other party seeks to enforce a particular term or condition.
Here are some tips to remember (and please read the small print):
- Make sure your staff know that your ts and cs that apply, rather than the other side’s. As a rule, put your ts and cs forward clearly to the other party at the earliest opportunity (certainly before the contract is made); make sure you have evidence that the other party accepts them; and expressly state in pre-contractual communications that it is your ts and cs that apply.
- Warn staff about additional promises made on the hoof in a sales situation. Make sure they adhere to your sales or purchasing procedures.
- Your ts and cs should be as detailed as possible, on the simple basis that the more you have written in, the more cover you have. However, bear in mind that an over-long and over-detailed contract may put off the other side altogether.
- Ts and cs generally apply for the length of the contract, but some clauses may need to be specifically drafted to extend beyond this (eg: clauses relating to confidentiality).
- In terms of format, your ts and cs need to be written in one standard document that everyone in the company uses (and isn’t capable of being changed by clients or staff). A PDF format is ideal, or a password-protected file.
- You also need a set routine for reviewing your ts and ts regularly, at an appropriate frequency for your business, so you can update them to reflect legislative/regulatory change and business growth. particularly as your own business changes.
Stuart Sproule is a commercial solicitor at SA Law based in St Albans. Contact him at firstname.lastname@example.org