Choosing the right terms and conditions for your business

Your terms and conditions are the backbone of your business, irrespective of the business model (e.g. sole trader, limited company, partnership) that you’ve chosen.

Which terms and conditions are right for your business is dependent on a number of matters, including what you’re selling and who you are selling to.

Who are you selling to?

This one is quite easy to answer.

You just need to ask yourself whether your customers buy your goods or services in connection with their trade, business or profession.

If they do, then you are selling to a business.

This is sometimes called B2B selling.

If they do not buy in connection with their business, they are buying your goods or services as a consumer (i.e. for their own personal use).

This is called B2C selling.

The distinction is important because, under consumer law, consumers get more protection than businesses and you will need to use different terms and conditions if you sell to them.

If you are selling to both business and consumers, you should have two sets of terms and conditions and use them accordingly depending on who you are selling to.

To learn more read Doing business with consumers.

What are you selling?

Once you have established the ‘who’ you then need to establish the ‘what’.

You need to ask yourself what you are selling.

Are you selling:

• Goods
• Services
• A mixture of both (e.g. supplying and fitting kitchen appliances)

If you sell to consumers, you also need to ask yourself whether you are selling digital content through downloads or streaming.

If you sell digital content in a tangible medium e.g. DVDs, you will require terms and conditions for the sale of goods.

We mention digital content specifically because special rules apply to digital content sold to consumers through downloads or streaming.

Check out our consumer rights when purchasing digital content to find out more about digital content.

Sometimes it can be hard to decide if you are supplying goods or services or a mixture of both.

In determining whether a contract is for services only or mixed goods and services it is useful to consider whether transfer of ownership of any goods is a key objective.

For example, if you run training courses for professionals and as part of this you hand out pens and paper, this is not a mixed contract but a services contract.

However, if you supply and fit washing machines, this will be a mixed goods and services contract.

If you sell to consumers what consumer regulations apply?

The Consumer Rights Directive (CRD) came into force in Ireland in 2014 under the European Union (Consumer Information, Cancellation and Other Rights) Regulation 2013.

These Regulations provides consumers with increased protection and apply when consumers enter into on-premises, off-premises (doorstep sales) and distance contracts with web traders based in Ireland and other EU countries.

On-premises contracts

The Regulations says that an on-premises contract is one that is neither an off-premises nor a distance contract.

However, this isn’t particularly helpful from a practical perspective.

Basically, if you sell goods on your ‘business premises’, you will be entering into an on-premises contract.

‘Business premises’ are immovable premises for permanent business or moveable premises e.g. a stall, for usual business.

You won’t need terms and conditions for day-to-day items sold on-premises e.g. milk, household items etc.

However, you should provide terms and conditions on the back of your invoices if you sell higher value items e.g. photocopiers.

You can access our Terms and conditions for sale of goods to consumers (from a premises)

Off-premises contracts

In practice, the most tricky distinction is between on-premises and off-premises.

In reality, off-premises transactions are probably less common now than in the past.

However, they do still arise.

The Regulations are fairly specific as to when an off-premises contract arises.

Such a contract is made:

1. While the parties are with each other away from your business premises;
2. Following an offer made by the ‘consumer’ while you are with each other away from your premises;
3. On your premises or through any distance communication immediately after the consumer was personally and individually addressed while you are with each other away from your business premises;
4. During an excursion organised by your business with the aim or effect of selling goods or services to the consumer.

Now we know that this all sounds rather complicated but the main thing to consider is where your contract is negotiated and made, rather than where it is performed.

If you basically agree to sales with your customers on a face-to-face basis away from your business premises, you will be entering into an off-premises contract and therefore terms and conditions for selling to a consumer off-premises are the appropriate terms for you.

You can find our terms and conditions for off-premises sales here

Terms and conditions for the supply of services to consumers (off-premises)

However, a business which visits a consumer’s home and later sends a contract or quotation for the consumer to decide upon sometime later won’t enter into an off-premises contract unless situation (2) above is applicable i.e. where the consumer has made the offer, which is probably unlikely.

This would be relevant for a home-improvement business, for example.

Though it may sound strange, such a contract would be an on-premises contract by default.

Distance contracts

Distance contracts are a lot more straightforward.

A distance contract is one that is finalised without any face-to-face contact, for example by internet, mail order or phone.

Many businesses today would be engaged in distance selling in some way or other.

Check out our guide on Distance selling to find out more

When can a consumer cancel their order?

There are several circumstances when the consumer can cancel proceeding with their order and obtain a refund – before they’ve received the goods

Here they are…

• if you’ve informed the consumer that there was an error with the price, or the description of the goods and they don’t now wish to proceed based on the correct price or description
• you’ve informed the consumer that you need to make a major change to the goods, services and/or digital content and they don’t now want to proceed with the change
• there’s a significant delay in providing the goods, services and/or digital content
• you’ve informed the consumer that you need to suspend the supply of goods, services and/or digital content
• if the goods, services and/or digital content were faulty (and in those circumstances, you would be responsible for paying for the goods to be returned)

If the consumer cancels the contract after you’ve dispatched goods but before they’ve received them, then the consumer must return the goods to you either by posting them (and paying for the postage cost) or returning them in person or by you allowing to collect them.

If before they’ve received the goods, the consumer decides to cancel their order for any other reason, including they’ve simply changed their mind, they’re entitled to:

• have the contract ended immediately and
• to receive a refund for any goods, services and/or digital content that they’ve paid for, but not yet received

However, you can make a reduction from the refund due, or if payment hasn’t been made, charge a reasonable amount of compensation, if you have incurred any costs (e.g. transport/delivery costs) due to the consumer cancelling the contract.

Returns are not the same as cancellations

Your returns policy is different to cancellations which is about the customer’s right to cancel the contract before receiving the goods.

Your returns policy applies to items which the consumer has already received.

Consumers don’t actually have an automatic right to get their money back, if they’ve changed their mind about what they’ve bought after receiving it and there’s nothing wrong with it.

However, it’s customary to have a returns policy so that consumers can return items, if this is done within a reasonable timescale and if those items haven’t been used.

Timescales for return typically range from 7–30 days.

Distance selling and cooling off periods

If you’re selling through a website, over the phone or by catalogues (sometimes called distance selling), consumers get what’s called a cooling-off period.

This means that the consumer is automatically entitled to 14 days to change their mind and receive a full refund.

Cooling-off periods are additional to, and separate from, the consumer’s other rights to cancel as mentioned above.

Cooling-off period for services

Consumers have up to 14 days to cancel starting after the day you contacted them to accept their order.

Cooling-off period for digital content

Consumers have up to 14 days to cancel starting after the day you contacted them to accept their order.

Cooling-off period for goods

For a one-off delivery of goods, the consumer has up to 14 days after the day they received the goods to cancel the contract.

When cooling-off periods don’t apply

There are circumstances when the consumer’s cancellation rights during the cooling-off period do not apply.

These include where:

• the consumer’s started to download or stream the digital content
• the services have been completed
• if the consumer has requested that you carry out urgent maintenance or repairs
• if the goods have been personalised or made to the consumer’s specification
• if the goods are of a kind that will deteriorate rapidly
• if the services are for accommodation, vehicle rental services, catering services or other services related to leisure activities and if the contract for those services is for a specific date.

What is the difference between terms and conditions and contracts for sale?

Terms and conditions are not the same as contracts for sale.

While both documents are contracts, they tend to be used in quite different contexts.

Terms and conditions

These are typically used for repeat custom arrangements, and those that are relatively swift and low value.

Where you’re setting out your trading terms using terms and conditions, you’ll usually either be:

• the party with the largest negotiating power over trading terms
• in a position where you don’t really need to negotiate terms at all

That might be the case, for example, where you’re dealing with consumers in a store or business users for an equipment hire service.

Terms and conditions work really well when you don’t want to change your sales position from one sale to the next.

So, they work especially well for businesses selling to consumers.

Contracts for sale

Contracts for sale on the other hand are more common where sales take place between businesses.

Even here, terms and conditions will often suffice, except where your trading relationship is likely to involve:

• higher value goods or services, and/or
• involve higher risk in delivery or performance, and/or
• more negotiated/bespoke terms.

Contracts for sale work well in the above scenarios, so that you can avoid giving every business customer those same terms.

And there you have it!

A flavour of the types of things that you need to be aware of when selling B2C.

Plugged has the terms and conditions templates that you need to ensure you’re ticking all the legal boxes and considering the key elements affecting the commercial robustness, as well as the legal compliance, of your consumer relationships.

Happy trading!