Terms of Trade are the terms and conditions on which your business buys goods and services from your suppliers and sells goods and services to your customers. They are essential in most business contracts and agreements.
If you do not take the initiative and set the terms on which your business trades, you will be stuck with the terms set by the other party you are doing business with. This may not suit or protect you in your commercial dealings. Terms of trade are especially important for businesses that supply goods and services through leasing and licencing.
It is important to have a commercial lawyer who can draft terms of trade who understand the commercial effect on your business. Having trading terms that are poorly drafted or ambiguous can lead to disputes and make the terms invalid.
There are also frequent changes to legislation that need to be considered and updated in your business documentation.
When considering what terms of trade are best for your business you should consider the following types of documentation:
Each of these documents should be considered in part and as a whole for your business.
They often deal with the fundamental issues between you and your client or suppliers and should be clear and concise. This will ensure that if a dispute or query arises that a clear path of action is documented to resolve the dispute or issue.
Terms of trade are intrinsically important to protecting your business and should be reviewed and updated, if required, every few years.
Some terms that are considered in Terms of Trade are:
If you are a supplier and want to reclaim goods if a customer cannot pay you need to have your supply agreements up to date. You need to be able to register your interest in goods under Personal Property Securities Act to be able to assert your rights should they become insolvent or default on payment. Your rights should be clearly documented in your supply agreements.
The previous “right of retention” clauses have lost their punch. Without PPSA registration you could be left with a powerless clause and unable to recover your goods from a bad debtor.
This is just one thing we will consider while drafting terms of trade.
The Australian Consumer and Competition Commission (ACCC) regulates and pursues companies for anti-competitive behaviour and protects consumers. Your documentation should not fall foul of the The Competition and Consumer Act.
Businesses should ensure that they do not have unfair contract terms or make false and misleading claims. These need to be considered carefully as a breach may lead to enforcement action against you by the ACCC. Having proper documentation will also protect you if there is an investigation launched by the ACCC into your businesses practices.
We ensure that the documents are carefully drafted with all the commercial considerations taken into account. The documents should act as a defence to prevent disputes from arising and provide clear guidance to the parties as to the terms of the commercial relationship.
We ensure that the Terms of Trade are well drafted and that if a dispute does arise that the terms cannot be misconstrued or deemed ambiguous.
This will ensure that the dispute is handled quickly and provides a clear framework to resolve the dispute.
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