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| Exclude terms imposed by the customer, including on the back of purchase orders or in the customer’s own standard T&Cs. Remember to expressly reject any customer terms to avoid the “battle of the forms” and the “last shot wins” principle. | Make sure that no additional terms are included on the supplier’s invoice. Consider issuing your own standard terms of purchase with your order. |
What is being sold / purchased? | Avoid being tied to a detailed specification and service levels if at all possible.
Exclude incorporation of any statements made in marketing materials and on your website.
Negotiate minimum commitment levels where possible. | Be very clear about the goods or services being ordered and the required specification. Negotiate service levels and delivery dates or milestones where possible. |
| Consider including flexibility on price and the ability to increase pricing for factors such as increases in raw materials or currency fluctuations pre-delivery.
Avoid committing to a set price over a long period – consider inflationary increases or reference to a standard price list. | Ensure the price is fixed for as long as possible.
Consider including discounts for bulk orders, speedy payment or minimum spend within the contract.
Does the price include delivery, packaging and insurance? Are there any hidden extras? Is VAT included?
Avoid any commitment that “time for payment is of the essence”. |
| Ex works = delivery at the supplier’s premises – the greatest onus is on customer.
Avoid any commitment that “time for delivery shall be of the essence”. | DDP = the supplier is responsible for all costs and risk of transporting the goods to the purchaser. Preferably the risk transfers after unloading at your premises. |
| Ex works = delivery at the supplier’s premises – the greatest onus is on customer. Avoid any commitment that “time for delivery shall be of the essence”. | DDP = the supplier is responsible for all costs and risk of transporting the goods to the purchaser. Preferably the risk transfers after unloading at your premises. |
| Consider keeping title to the goods until receipt of full payment (but note that this can cause issues if the goods are sold on or damaged). | Avoid permitting the supplier to enter your premises to recover the goods. |
| Limit any warranties to the provision of the services with due care and skill (for the sale of services) and that goods shall be of satisfactory quality (for the sale of goods). This is required by law in each case. | Obtain warranty protection of goods for a 6-12 month period (depending on the nature of the goods) and remedies at your option if the goods are defective, including a right to obtain replacement goods/services at the supplier’s cost. |
Indemnities and liability | Avoid giving indemnities for breach of contract, or for other wide-ranging or unidentified losses which are unreasonable or outside your control. If you can accept giving an indemnity, consider including a duty for the customer to mitigate its losses and conduct of claims wording. Try to exclude liability for loss of profits, loss of revenue or loss of business. Include a cap on the supplier’s liability to limit potential exposure under the terms. | Avoid permitting the supplier to cap any liability under indemnities. Avoid permitting the supplier to exclude liability for direct loss of profits and other financial losses. Exclusion of indirect losses, loss of goodwill/reputation and opportunity is fairly standard. |
| Consider including a minimum term for the supply of services to ensure the customer commits for a set period of time. | Avoid lengthy minimum terms with no ability to terminate for convenience. |
| Avoid giving the customer the right to terminate for convenience (or consider tying this to a minimum term), especially where the contract is high value or otherwise important to the business). It can be difficult for a supplier to terminate as a result of a customer’s insolvency. Make sure you act quickly if a customer fails to pay on time. | Ensure robust rights to terminate if the supplier fails to adhere to delivery timeframes or specifications or where one instalment is defective. |
