If you're a business owner, you may have terms and conditions printed on your invoices (such as how quickly the invoice must be paid and the penalties for running late) or, at the very least, you will have seen other businesses with those sorts of T&Cs on their invoices. But without having already provided the customer with these T&Cs at the outset, are the T&Cs on invoices worth the paper they are written on? In most cases, the answer is no.
The courts have made it clear on numerous occasions that invoices are not the place to be setting out your T&Cs. Customers are entitled to assume that an invoice is just a demand for payment, rather than a document containing contractual clauses. In most cases, the courts will not expect a customer to read or accept any T&Cs contained on an invoice even if those T&Cs are clearly identified, for example under a specific heading.
This has caused some serious headaches for businesses in the past. For example, there are numerous cases in the mining industry where big, expensive mining equipment has been damaged and someone has tried to point to a clause that excludes them from liability. However, because the clause only appears on their invoice, it is useless.
So what's the solution? It's simple – provide your customers with your T&Cs at the outset, in a "Terms of Trade" document. Your Terms of Trade do not need to be overly lengthy or complicated. In most cases, they can fit on a single page.
There are all sorts of things that your Terms of Trade can cover, and we will be putting out a separate article on that topic shortly. But the most important thing to understand is that Terms of Trade provides certainty and clarity around your contract with your customers and gives you something that you can refer to and rely on when you're arguing liability, chasing payment, or imposing a fee or interest for late payment.
We are running a free Terms of Trade seminar on Thursday 21 May and you can register here.
If you have any questions regarding invoices or Terms of Trade, please feel free to contact our expert Commercial Law team on 1800 650 656. We're here to help!