Terms of Trade are the contractual rules and conditions that are essential to a business dealing with its customers. To run a business without some form of terms of trade is a risky venture given there are no specific expectations set with the people the business is trading with. In New Zealand there is extensive legislation that deals with the public’s rights in terms of consumer protection and fair trade. While a fair amount of these rules cannot be contracted out of by businesses, having a formal and detailed terms of trade is essential to at least provide some protection to the trading entity. Terms of Trade can cover things such as the following:
- Quality – What service levels or product performance levels can the customer/client expect?
- Price – If there may need to be variations as to what a customer may pay where the business is providing ongoing goods or services, how are those fluctuations to be managed?
- Credit – Are you providing goods or services on credit, and if so, what are the terms of that credit arrangement?
- Guarantees – If you are providing credit to a company do you have guarantees from the directors of that company to create more certainty as to you being paid?
- Disputes – Is there a dispute resolution process if something goes wrong?
- Returns – Do you have specific return policies that need to be advised to customers in respect of goods?
- Insurance/Risk – Where your business may be dealing with major contracts and the supply of large amounts of product, who bears the risk in those products and who is responsible for insuring against those risks?
- Limitations – Do you need to specifically identify situations where customers will not have recourse to your business if they have not used the product you have provided correctly or have used it for a purpose it is not made for?
- Costs – If a customer doesn’t pay for goods or services you have provided on credit, do you have the right to recover your business’s costs in obtaining recovery or repossession of the goods?
Prudentia Law can draft terms of trade that will suit your specific business needs. Feel free to call us to arrange a meeting to discuss what the sensible options for you are in terms of how you contractually do business with your customers.