Setting out clear and relevant terms and conditions — and keeping them up to date — is crucial to protecting your business while minimising your personal risks as the director of your company. Let’s take a look at why terms and conditions are so important, and what things you should include to ensure your terms and conditions are effective.

Why are Good Terms and Conditions So Important?

There are many reasons why you need to set out clear terms and conditions. Let’s explore some of the key benefits:

Build Trust

Having relevant and transparent terms and conditions helps give your clients peace of mind and a clear understanding of their obligations to you and yours to them. Making this information clear and accessible helps ensure efficient transactions while building client trust and loyalty — two invaluable assets for a business.

Differentiate Your Business

In a saturated market where one brand can look very much like all the others, your terms and conditions could be the primary point of difference that sets your company out from the rest. Terms and conditions can help customers better understand your business while serving as a key differentiator that helps influence customers to choose your company over those of the competition.

Protect Against Litigation and Financial Risk

Without good terms and conditions, your business may be open to litigation and financial risk. That’s because terms and conditions lay out your rights and responsibilities — as well as those of your clients. Doing this right from the outset helps set expectations for the business relationship while leaving little room for dispute.

For example, you can use your terms and conditions to outline the scope of services you offer. This helps manage expectations while giving you something concrete to refer to if a client asks you to exceed this scope or attempts to take you to court.

Please note: If your terms and conditions aren’t drafted by an expert, they may be subject to the criticism of experienced contract lawyers. They also might not adequately protect your business interests in the event of a dispute or legal proceedings.

What Should Good Terms and Conditions Include?

Every business is unique and so too are their terms and conditions. However, there are some clauses and inclusions that most businesses should consider incorporating into their terms and conditions to achieve the best outcomes:

  • Default Clause: This outlines what will happen in the event of a client default. The default clause should include your entitlement to collect interest on overdue payments, and to recover costs for debt collection and legal costs obtained while pursuing the overdue payments.
  • Director’s Guarantee: The director’s guarantee is where all directors personally guarantee the performance of their obligations, including payment. This provides further protection for your financial interests, particularly when you’re unsure of a client’s ability to pay.

All terms and conditions should contain standard disclaimers, conditions, and warranties to limit your liability as much as legally practicable.

Depending on the nature of your business and how it operates, there may be additional terms that must be included by law. If you have a business website, for example, Australian Consumer Law requires that you have website terms and conditions. If you collect customer information or credit card details you’ll also be subject to privacy laws.

Need Help Drafting Your Terms and Conditions?

Ensuring that your terms and conditions sufficiently cover your legal obligations, protect your business from litigation, and clearly demonstrate the scope of your services can be a challenging task — and one best left to the experts.

By engaging the services of a legal professional, you can confidently develop a strong and consistent set of terms and conditions that cover all aspects of your business. If you need help drawing up or reviewing your terms and conditions, contact the friendly team at QR Lawyers today.

Get in Touch


DISCLAIMER: This article is intended to provide general information and should not be relied upon as legal advice. Formal legal advice should be sought if you are concerned about, or require particular advice applicable to your specific circumstances in relation to, any topics covered in this article.