Black and white is the best form of contract

Manufacturing and production businesses are flourishing both locally and internationally.

However, having acted on behalf of a variety of manufacturing businesses involved in disputes, I consistently encounter problems with the contractual documentation – or sometimes, lack thereof – between the supplier and purchaser.

Written terms and conditions (T&Cs)

Even in this day and age, many contracts are formed with a handshake.

A handshake is an inadequate method of concluding a contract and can leave businesses exposed in the event of a dispute.

Best practice is to issue written T&Cs prior to starting any work. They provide clarity and se curity to both parties.

They need not be particularly complicated but they should be robust.

In my experience, it is preferable to commit something to writing at the point of contracting rather than trying to identify what was agreed once memories have started to fade.

Court cases can be lost on the basis of poor memories.

In many cases where there is a dispute, businesses still want to preserve a commercial relationship and issuing T&Cs at the outset can help to achieve that – each party then knows where they stand.

What should be included in the T&Cs?

While this is not meant to be an exhaustive list, I would generally expect to see the following:

• Product specification/description;

• Payment terms;

• Delivery terms;

• Terms concerning quality/fitness of the product supplied;

• Obligations on the purchaser (product use, solvency, etc.);

• Obligations on the supplier (warranties, maintenance, etc.);

• Dispute resolution clause.

How should T&Cs be issued?

T&Cs must be brought to the attention of the other party.

If they are attached to an email, the body of the email should specifically mention them and refer the receiving party to the attachments.

Likewise, in a letter, the T&Cs should be expressly mentioned as being enclosed.

With online transactions, it is entirely acceptable to use a “tick the box” tool so long as there is a link to the T&Cs.

The main thing is to ensure they are brought to the receiving party’s attention.

If the receiving party opts not to read them, they are still bound by them – ignorance is not a defence as long as the T&Cs have been properly signposted.

When should written T&Cs be issued?

I cannot stress enough the importance of issuing T&Cs before commencement of the contract.

If T&Cs are issued after the contract commences, they may not be properly incorporated and the receiving party, on most occasions, would not be bound by them.

Conclusion

Manufacturing/production is at the forefront of the Scottish economy and has a heritage to be proud of.

It is therefore important that the manufacturing sector protects that heritage and continues to grow on a global scale.

T&Cs provide clarity and security to all parties – the benefits will far outweigh the costs.

Court cases can be lost on the basis of poor memories LAUREN RAE

A handshake is not adequate in concluding a deal.