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When starting a small business there is a lot to do, and it can be tricky to manage the competing priorities.  Getting your product or service into the market is top of the list.  Before you know it, the business is moving along and clients are coming in.

Many people trust that their clients will pay what the goods or the job is worth.  But to greatly increase your prospects for good client relationships and to safeguard your cashflow, it is important to have clear and effective agreements.  Good agreements make each party’s obligations clear and are free from ambiguity.

A simple way to address this is to develop a straightforward terms and conditions document which can be used everyday.  It’s never too late to do this.

Small business owners can be tempted to simply adopt the terms and conditions of another similar business that might have fallen into their hands or, even more risky, to use a terms and conditions document that they have found on the internet.  This might be in an attempt to save on legal costs or because they feel overwhelmed by legal issues.  Or, it could be that the business owner thinks that a lawyer will draft something long and complicated that will scare away potential customers.

However, a good terms and conditions document will:

a) enhance client relationships through clear communication, particularly because clients will know upfront how they will be charged, when they need to pay and how any concerns will be treated.  Friction and mistrust is far more likely to occur whether there is uncertainty or a reluctance to openly discuss important business terms;

b) improve cashflow, by including clear requirements regarding payment timeframes and the consequences of late payments;

c) be drafted with their intended audience in mind, and not be needlessly complex or “legalistic”; and

d) be tailored to meet your business needs and to comply with applicable laws.

Murray Thornhill, Managing Director of HHG Legal Group, who often advises small and large businesses on their terms and conditions:

“In our experience, the process of drafting your terms and conditions can also be a useful exercise in covering issues that businesses usually overlook.” 

For example, it is natural that your focus will be on the day to day matters such as price and payment terms.  However, terms and conditions may also deal with passing of title and the Personal Property Securities Register, disclaim your liability for delays or failures outside of your control, protect your intellectual property rights and enable you to recover debt collection and legal costs.

“The exercise will provide you with important legal protections which may not be obvious to the non-lawyer, but can be covered in simple language.” Mr Thornhill said.

Like insurance, putting these simple agreements in place from the outset will put you and your business in the best position.

This is general information only, and does not constitute specific legal advice. If you would like further information in relation to this matter or other legal matters please contact our office on Freecall 1800 609 945 or email us now.

*The information provided in this website serves as a general guide and does not constitute legal advice. It is based on our research and experience at the time of publication. Please consult our knowledgeable legal team for any specific inquiries or advice relevant to your circumstances, as the content may not have been updated subsequently.