How to sort out trade agree­ments

Kapi-Mana News - - OPINION/NEWS -

L asks what she should in­clude in her Terms of Trade for her small busi­ness. If you are en­ter­ing into a con­tract for the buy­ing/sell­ing of goods or ser­vices, it is im­por­tant to know what you are agree­ing to.

A sim­ple terms of trade should set out who the par­ties are, what goods or ser­vices are to be sup­plied and when, any de­tails as to qual­ity etc and when pay­ment is due, in­clud­ing the de­posit upon ac­cep­tance and any bal­ance.

You may also want to spec­ify what hap­pens if the con­tract is not com­pleted – for ex­am­ple, in­ter­est on un­paid amounts, costs of re­cov­ery ac­tion and own­er­ship of the goods un­til the ac­count is paid.

Other mat­ters to con­sider in more com­pli­cated mat­ters may be who owns the in­tel­lec­tual property in the goods or ser­vices, pro­vi­sion for vari­a­tions, guar­an­tors, ref­er­ences, dis­pute res­o­lu­tion pro­cesses etc.

Check that the par­ties are cor­rectly named and iden­ti­fied.

Are they in­di­vid­u­als, com­pan- ies, trusts or per­haps in­cor­po­rated so­ci­eties?

It may be too late to try to add the cor­rect party later if the wrong one is named on the agree­ment.

If the other party is a com­pany or other en­tity, you should con­sider if you need a per­sonal guar­an­tee from one or more in­di­vid­u­als.

You do not want to be chas­ing a shell com­pany that turns out to have no as­sets.

Once you have your terms of trade sorted, make sure you pro­vide them to the other party be­fore you agree on the con­tract. It is too late af­ter­wards to add them in. Some places put their terms on the back of the in­voice – that is too late.

Make sure that any re­quired in­for­ma­tion is com­pleted – for ex­am­ple, names, ad­dresses, con­tact de­tails.

Also, get some ac­knowl­edge­ment of ac­cep­tance of the terms – for ex­am­ple, a sig­na­ture or email.

Make sure this is by or from the per­son en­ter­ing into the agree­ment and not some­one else.

This avoids later claims that the terms were not pro­vided in ad­vance and agreed to by the cor­rect party.

If you have sought trade ref­er­ences to check on their credit wor­thi­ness, make sure you check them out be­fore you en­ter into the con­tract.

It is too late to pull out ow­ing to a bad credit ref­er­ence af­ter you have signed up the cus­tomer and agreed to sup­ply.

If the terms pro­vide for cer­tain steps, make sure they are fol­lowed – for ex­am­ple, if vari­a­tions can only be in writ­ing, a ver­bal vari­a­tion is not bind­ing. Put it in writ­ing and get it signed.

You then have a bind­ing vari­a­tion and proof that it was ac­cepted.

If prob­lems arise, deal with them quickly.

Do not sit on a bad debt or com­plaint be­cause the prob­lem will only get worse.

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