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Are your terms and conditions working for you?

  • Northern Ireland

    24-06-2022

    In an age where everything is available online, why shouldn’t you just use the terms and conditions pro forma you found online? The internet knows everything right? Wrong.

    I cannot emphasise enough how important the ‘small print’ is, not just when signing up to a more overarching contract with a third party, but for each and every contract for the sale and supply of goods and services that a business enters into.

    After years in practice as a litigation solicitor I am often confronted with businesses who have either obtained their terms and conditions online, or simply never updated their terms since their business was incorporated. This can cause a whole host of issues for you as these usually provide little by way of protection and certainly do not make life easy once issues arise. And issues do arise.

    One of the most important things to confirm when entering into a contract, and one which is surprisingly overlooked, is who you are entering into a contract with. Is it a limited company, an individual under a trading name, a partnership? Getting this right at the start will save time and money exploring this at a later date if there is uncertainty, and if any legal action against a counter-party is required.

    Another common issue we see relates to jurisdiction – where do you operate? Northern Ireland, the Republic of Ireland, England, or further afield? These are all separate legal jurisdictions, so if a legal dispute arises, where would you prefer this to be heard? If it is Northern Ireland then you need to state this in your terms. We quite often see clients who operate solely in Northern Ireland adopting standard terms and conditions that state legal disputes will be determined by the Courts of England & Wales, in accordance with English law. This does not make practical sense.

    This has become increasingly important with the end of the Brexit implementation period- the EU legislation by which extra-judicial documents were served has come to an end. If a business has an exclusive jurisdiction clause, which is “imperative and directory” that the other party agree to submit any claim to the jurisdiction of the Northern Irish courts, then the Hague Convention on Choice of Court Agreements 2005 can be relied upon to serve court papers out of the jurisdiction, potentially without requiring the leave of the court.

    Another clause on which we have been increasingly advising since March 2020 is force majeure, and in addition we are increasingly seeing ‘Covid clauses’ inserted into contracts. In what circumstances might a contract be frustrated and who is responsible for the losses arising as a result? A number of high profile legal cases have been brought before the courts in the past couple of years to determine this very question, in light of some massive supply chain disruption.

    Turning your mind to these very general questions, taking some time to risk assess new customers and ensuring your credit control procedures are up to par, might well save you from uncertainty and litigation further down the line. This is especially important at the moment when the economy is in recession. Have you provided for what will happen in the event that your client becomes insolvent?

    Eversheds Sutherland regularly advise and assist business clients with the drafting of their terms and conditions, ensuring these meet the need of the individual business. This can take the form of updating existing terms and conditions, adapting these to business in a new market, or providing a full suite of terms.

    Matthew Howse is a Partner in the Dispute Resolution and Litigation Department at Eversheds-Sutherland Solicitors and Emily Paisley is an Associate in the Team. For advice, please e-mail MatthewHowse@EvershedsSutherland.ie or EmilyPaisley@EvershedsSutherland.ie, or alternatively telephone 028 9526 2000.

    This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full terms and conditions on our website.

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