Pros and cons of standard terms and conditions
Pros and cons of standard terms and conditions

The following Commercial guidance note provides comprehensive and up to date legal information covering:

  • Pros and cons of standard terms and conditions
  • Using standard terms and conditions
  • Importance of standard terms and conditions
  • Advantages of using standard terms and conditions
  • Disadvantages of using standard terms and conditions
  • Advising clients on the appropriateness of using standard terms and conditions

Using standard terms and conditions

Businesses use standard terms and conditions (T&Cs) for many reasons, eg:

  1. speed

  2. consistency

  3. cost, and

  4. allocation of risk

Many businesses use standard T&Cs without appreciating their importance. Frequently, businesses do not enter into written agreements or may take agreements verbatim from elsewhere.

It is essential that businesses understand the need to enter into written agreements where possible and to adopt written terms that are pertinent to that business or trade.

Furthermore, in comparison with contracts concluded between two businesses, the room for manoeuvre when drafting is considerably limited in business-to-consumer T&Cs under the Consumer Rights Act 2015 (in force: 1 October 2015) because of the rules on unfair terms in consumer contracts. The CRA 2015 states that, in particular:

  1. an unfair term of a consumer contract is not binding on the consumer

  2. a term is unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer, and

  3. contracts must also be drafted in ‘plain and intelligible language’ and ‘be legible'

Importance of standard terms and conditions

Standard T&Cs, if used correctly and duly incorporated, are fundamental to income generation. They should form the basis of all contracts and provide a framework for day-to-day operations as well as protection