27/09/2012

Most businesses are in business to make sales of one type or another. If your business, or the business of your clients, is to sell products, no matter how strong that relationship with customers is, there needs to be conditions of sale in place because, if something goes wrong, you will need them for your protection.

Check your conditions of sale against this list!

Do your conditions of sale bind your customers?

To be effective, your conditions of sale must:

•    be given to your customers before any contract is formed; and
•    form part of that contract with your customers.

This is best done with a written contract signed by your customers but this can be achieved in other ways eg a customer can click to agree and accept conditions on a website before proceeding to get information or receive a product.

What is not effective is giving a customer your conditions of sale after the sale has been made (for example on the back of your invoice)!  

The Conditions of Sale

The basics

 1   Are the products specifically defined?
 2   Does the definition include new versions, new models or upgrades?
 3   Was the product sold by example or sample?
 4   Did the customer buy off the shelf or has the product been tailored?
 5   If tailored, did the customer outline specifications for the product?
 6   Have those specifications been included in the agreement?
 7   If the sale negotiations were protracted have all the various issues been included?
 8   How will the products be delivered and at whose cost?
 9   Do you as the supplier warrant important aspects of the product?
10  Do you provide related services in connection with the products?
11  Are the services specifically defined?
12  What warranties do you provide in connection with these services?
13  What on-going technical support will you provide?
14  What are the arrangements for after-sales service?
15  Can you guarantee supply?
16  Have you promised a specific time for supply in which case if you fail will the buyer suffer loss?
17  Is there any minimum quantity the customer must purchase? 

Ownership, risk and security for payment

18  Should the products be insured by the customer and when?
19  When does ownership of the products pass to the customer?
20  When does risk in the products pass to the customer?
21  Is your interest in the products protected under the Personal Property Securities Act (PPSA) during any    period when you are waiting for payment
22  Do you comply with the PPSA?

Payment

23  When, where and how are you paid?
24  What happens if the customer defaults or becomes insolvent?
25  Do you have any security for payment?
26  Do you have a retention of title clause?

Termination

27  Can you terminate the contract- if so, how and when?
28  Can you terminate if the customer fails to meet minimum purchase levels?
29  What happens if a party cannot perform its obligations for causes beyond its reasonable control?

General provisions

30  Can the conditions be amended and, if so, how?
31  What happens with genuine errors in orders or invoices?
32  When must claims be made for shortages, wrong deliveries etc be made?
33  Can products be returned and, if so, how and when?
34  Do your terms include a dispute resolution clause to avoid court proceedings?
35  Do you limit your liability under the Competition and Consumer Act?

If you don’t have conditions of sale for your products or they are not up to date and effective or they don’t deal with at least these matters, please contact TOWNSENDS BUSINESS & CORPORATE LAWYERS on (02) 8296 6222.