December 2016 Credit Management magazine

LEGAL MATTERS
ARE YOUR TERMS AND CONDITIONS
OF BUSINESS FIT FOR PURPOSE?
When was the last time that you: reviewed your terms and conditions of business?
or considered the procedure for ensuring that they govern your contracts?
DD + 44 161 604 1642 E craig.chaplin@dwf.law W www.dwf.law/recover
Craig Chaplin
THERE have been numerous recent
changes in the relevant law and the
technology that businesses use to form
contracts. Are you confident that your
terms and procedures still represent best
practice?
The key points for you to consider and take
advice on are:
1. Incorporation
There’s no point having perfectly-drafted terms
and conditions unless they form part of every
contract. DWF can review your methods of
forming contracts and advise on the most
appropriate method of incorporating your terms.
2. Price and payment
There are lots of issues to think about:
Is it useful to make time of payment of the
essence? Should you exclude the customer’s
right of set-off? If so, is there a risk that this
may be unenforceable under UCTA. Should you
rely on the Late Payment of Commercial Debts
(Interest) Act 1998 (LPA) or include a contractual
interest rate? Can you “mix and match” the
LPA provisions and contractual rights?
3. Retention of title (ROT)
Drafting a good ROT clause is about protecting
your business, while not making the clause
unenforceable. For example, do you want to
include an “all monies” clause so that title only
passes when the customer pays for all the
goods that you supply? This risks making the
clause unenforceable if not carefully drafted.
You also need to consider what the customer
does with the goods, e.g. selling them on or
using them to make other goods.
4. Penalty clauses
The Supreme Court recently set out a new
test for when a clause that provides for a
remedy such as interest on late payment is
an unenforceable penalty. You should review
all such clauses to check that they still work
under the new rule and whether they could be
redrafted to offer more protection.
5. Variation clauses
While your terms probably include a provision
that the contract can only be varied in writing,
recent case law has confirmed that this can be
overridden by the parties’ oral agreement or
conduct. Have you trained your team on this
risk?
6. The Modern Slavery Act 2015
Have you heard of this new act? If so, did
you assume that it’s nothing to do with your
business? This is a common misconception
and you should think again. All large
commercial organisations carrying on business
in the UK must publish an annual “transparency
statement” setting out the steps they have
taken in the previous year to ensure that their
business and supply chains are slavery-free.
If caught, you need to update your terms of
purchase to obtain appropriate warranties
from your suppliers. You should also consider
whether to update your terms of sale to give
your customers suitable warranties.
7. Unfair contract terms
Are you aware that the Unfair Contract Terms
Act 1977 doesn’t just apply to clauses where
you attempt to exclude or limit your financial
liability, but also to clauses where you purport
to give yourself the right to evade responsibility
for delivering the goods or services which you
have contracted to supply? This can include
tolerances, get-outs for late delivery, force
majeure, entire agreement clauses, or clauses
that restrict the other party’s ability to exercise
its rights.
8. The Consumer Rights Act 2015 (CRA)
If you contract with consumers, have you
updated your terms and conditions to comply
with the CRA? This has given consumers new
rights and remedies and created a new category
of “digital content” alongside the existing
categories of goods and services.
9. Data protection
In May 2016, the EU adopted the General Data
Protection Regulation (GDPR), which member
states must comply with by May 2018. Despite
the recent Brexit vote, this is still important
because: (1) it is likely that the UK will still be
an EU member in May 2018; and (2) following
our departure, it is likely that UK data protection
law will mirror EU law so that UK businesses
can continue to trade with EU customers.
Accordingly, you need to update your terms to
comply with the GDPR.
DWF’s Commercial team has extensive
experience of drafting, reviewing and updating
terms and conditions of business. Contact Craig
Chaplin to discuss your requirements: 0161 604
1642 or craig.chaplin@dwf.law. We also offer
fixed price support to help you comply with your
obligations under the Modern Slavery Act 2015.
Please see http://www.dwf.law/news-events/
promotions/2016/03/modern-slavery-act-2015/
or email ModernSlaveryEnquries@dwf.law.
This information is intended as a general discussion
surrounding the topics covered and is for guidance
purposes only. It does not constitute legal advice
and should not be regarded as a substitute for taking
legal advice. DWF is not responsible for any activity
undertaken based on this information.
Craig Chaplin is a Partner at leading law
firm DWF and Head of the Commercial and
Competition Team. Craig provides advice on all
different types of B2B contracts. His particular
specialisms include information technology,
telecommunications, outsourcing, facilities
management, franchising and intellectual
property licensing. Craig regularly advises
on IT infrastructure projects and complex
relationship agreements as well as high value
brand acquisitions.
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VISIT THE CICM WEBSITE AND CLICK ON THE FREE ADVICE LINE.
24 December 2016 www.cicm.com
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