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Small print, big impact

Be honest. How often do you read Terms and Conditions online when making a purchase? Probably not very often, if ever.

If you are a business owner or a director, ask yourself when you last looked at your own Terms and Conditions? Do you know what they say and are they fit for purpose?

Typically, an SME's Terms and Conditions will fall into one of two categories. These are as follows:

1. You have taken the time to prepare (perhaps with the assistance of legal advice) a set of comprehensive Terms and Conditions which are bespoke and relevant for your business.  If you fall into this camp, then the remainder of this article is likely to be of little relevance to you; or
2. Your Terms and Conditions are either inadequate or inappropriate in some way, perhaps they were copied and pasted from a rival's set and altered to reflect the correct business name.

Whilst these are the extremes, and there are undoubtedly many steps in between these two scenarios, the majority will fall into one or the other.

If your Terms and Conditions fall into the first category, it is likely that they were drafted as robustly as possible in an attempt to protect your position. Whilst this is good, it is by no means a safety net that guarantees protection.

If your Terms & Conditions fall into the latter camp, then this is something that you should look to address swiftly. They will form the backbone of your commercial relationships and if they do not include what you want and need them to, then it is possible that your business could be held hostage by them if and when the worst happens and a dispute arises. It is not uncommon for a business to try to rely on contractual terms and then find that they provide little or no legal assistance whatsoever.

The recent Court of Appeal case of Globe Motors Inc v TRW Lucas Varity Electric Steering Ltd [2016] EWCA Civ 396 provides a salutary reminder that you may want to schedule regular reviews to ensure that your terms continue to offer the level of protection you think they do. If a dispute arises, clauses can be subjected to scrutiny with regards to their reasonableness.

The Globe Motors case involved two parties who contracted on one party’s set of standard Terms and Conditions. This included (as is common) a number of exclusion clauses including, in this instance, a clause requiring any variations to the Terms and Conditions to be in writing. The Court found this clause to be unenforceable, holding that there was nothing in principle that stopped the parties from agreeing oral variations to the Terms and Conditions. The effect being that the oral variations created a new contract which superseded the old contract with specific regard to the varied terms.

The question of enforceability of an anti-oral variation clause was revisited by the Court of Appeal in the more recent case of MWB Business Exchange Centres Ltd v Rock Advertising Ltd [2016] EWCA Civ 553.  The Court found no “powerful reason” to depart from the Court’s view in Globe Motors.  This can therefore, at least for the time being and subject to the matter being addressed at Supreme Court level, be considered as settled law.
This is by its nature an exceptional case, and does not mean that you should ditch your existing Terms and Conditions if they include exclusions of liability. It is better to have such clauses and to defend them, than not to have them. If they are absent, they simply cannot be enforced.  The lesson to take from this case is the importance of regular review and clarity, rather than write-and-forget.

If you are in any doubt, and require assistance with a review of your T&Cs, or drafting a bespoke set which work for you, please contact Iain Garfield iain.garfield@bpe.co.uk or Helen Martinelli helen.martinelli@bpe.co.uk . If you require assistance with a dispute relating to your Terms and Conditions or a relationship with a customer / supplier, please contact Thomas Hall thomas.hall@bpe.co.uk 01242 248459.

These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice

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