Terms of trade are the terms and conditions that you and your clients agree on before you start any work. Typically used in the trades industry, your terms of trade are very important for ensuring that you and your clients are clear on details such as:
- the scope of the work; and
- what rights you both have.
Keeping everyone on the same page can reduce the risk of any disputes arising later down the track. In this article, we outline the key clauses to include in your terms of trade.
How Do I Use a Terms of Trade?
Whether you have been running your plumbing or electrical business for years or are just starting out, you are likely familiar with the process of providing clients with a proposal or quote before you begin any work. This first step ensures that the client is happy with the price and understands what work you will complete for them. Your terms of trade do not need to vary this process significantly. The terms of trade can be attached to your proposal or quote to set out the rights and obligations of both parties in more detail. The key terms you should include are set out below.
What Are the Key Terms in My Terms of Trade?
Price
Your price is one of the first things you will need to agree on. You should clearly outline your price in the contract.
Invoicing and Payment
Once the client knows what the price will be, it is important to set out when the:
- client will receive an invoice; and
- the invoice will be due.
It is common to agree that you:
- will stop performing the services;
- may charge interest on unpaid invoices; and
- can engage debt collectors or take legal action to recover the unpaid invoices.
Scope of Work
Whether you describe your services in the terms of trade or include them in your quote or proposal, it is crucial that you clearly agree on what work you will carry out. This is where many disputes can start with clients.
Make sure any part of the scope of work that you discuss and agree upon is set out in writing. It is very difficult to prove that you agreed to something in a casual conversation.
Warranties
A warranty is an assurance from one party to another. You have probably heard of a warranty being provided by a business for a period of time after installing a good, such as a washing machine, but it is also possible to ask your client to make certain warranties.
Defects
Your clients may be legally entitled to certain consumer guarantees. Under the law, the services you provide to a consumer must be:
-
- performed with due care and skill;
- fit for any specified purpose; and
- performed within a reasonable time (if time is specified).
If you wish to provide your clients with warranties against defects beyond those set out under the law, you will need to include mandatory wording in your documents. A lawyer can help you ensure that your warranty documentation complies with the law.
Liabilities
If something goes wrong during the course of the terms of trade, you will want to limit your liability. Limited liability means that you set the maximum amount that you are responsible for.
Termination
Your terms of trade should clearly state what the term of the contract is. Typically, the contract will:
- start when the terms of trade are agreed to; and
- continue either for a set period of time or until you have completed the scope of work.
Sometimes, an issue that arises is one party wishing to terminate the terms of trade before the term is over.
Continue reading this article below the formKey Takeaways
Terms of trade are important when you provide a service to clients. Your terms of trade will:
- ensure everyone is on the same page; and
- help to minimise the chance of any disputes occurring.
The terms of trade can be attached to any proposal or quote form you already use. Together, the two documents can form a strong set of terms and conditions. If you need assistance drafting your business’ terma of trade, contact LegalVision’s commercial contracts lawyers on 1300 544 755 or fill out the form on this page.
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