Guidelines on incorporating Standard Trading Conditions (STC's)
Standard Terms and Conditions (Terms) are usually drafted to deal with the mundane matters that govern all contractual relationships, whereas the actual work to be performed will usually be negotiated in a separate agreement or work order. Whilst a lot of care and attention will be given to discussing the work you will be undertaking, sometimes the issues usually contained in standard terms are forgotten about altogether. Terms usually include clauses concerning the governing law, dispute resolution, limitations of liability, apportionment of risk and insurance requirements. In other words, very important contractual issues.
Having a good set of Terms in your desk drawer or on your website, is all very well, but unless you have incorporated them into your contract with your client, you will not be able to rely on them. It is therefore very important that you do incorporate your Terms into all your contracts.
Here are a few general tips on how to do so:
- Your Terms must be brought to the other party’s (counterparty) attention before or at the time the contract is made. Usually, it is sufficient to bring them to your counterparty’s attention and make copies available to them. If the counterparty chooses not to read them, that is their concern.
- The safest way to incorporate Terms is to send a copy to your counterparty and make them sign them or alternatively, acknowledge receipt of them (although we understand that this is not always practical). If they are signed or acknowledged your counterparty will not be able to say they had not seen them if a dispute arises.
- In many cases you will not receive a signed version back or even an acknowledgement. However, as long as you can show that a copy was provided or made available they should still be effective. Simply because they are not signed or acknowledged, does not preclude them from forming part of the agreement.
- You should make a copy of your Terms available on your website. You should also include a foot note on your emails that states “all work undertaken is done so strictly in accordance with our Terms and Conditions, a copy of which is available [here/hyperlink]. Copies are also available on request”. You should also have a similar foot note on faxes, letters, invoices and any other form of communication as this can help build up a “course of dealing” argument. In other words, if you forgot to specifically refer to your Terms on one occasion (for example a contract made via a quick telephone call) you can validly argue that as you always contract on your Terms and as your counterparty has been made well aware of that fact numerous times during previous dealings, they were well aware they would apply on this current occasion as well.
- If the Terms are brought to the counterparty’s attention once the contract already exists (and there is no “course of dealing” argument) it will be TOO LATE to incorporate them.
- “Last Shot Wins”. Under English law, the last Terms provided in the negotiation, usually prevail. Therefore, if you send an email stating “we will undertake this work in accordance with our Terms” look out for replies that state “Thank you for your email, we note you are prepared to do this work, which will be subject to our Terms”. If the work commences at this stage, it may be your counterparty’s Terms that govern the agreement and not your own.