Business

Dutch law does not require entrepreneurs to draw up general terms and conditions. Yet it is highly advisable to do so, especially in the early stages of your business. Many starting entrepreneurs think that general terms and conditions are superfluous and only useful for large companies. In this blog, I explain why every business entity should have a set of general terms and conditions ready before their first customer. 

Clarity

Using general terms and conditions, it is at once clear for you and your customer what your mutual rights and obligations are. There is no ambiguity about all kinds of important peripheral issues such as delivery, payment, liability, guarantee, etc. The use of general terms and conditions prevents discussion on important matters after the deal has been closed. In case no general terms and conditions were agreed on by your and your client, the law determines fills in the gaps and defines the rules. Tricky, because the law does not cover all topics extensively. Then, case law (jurisprudence) has to be reviewed to see what a judge would rule on a particular point of discussion. Of course, you want to avoid all this by making good agreements with your client. Drafting general terms and conditions is the easiest way to do so.

Limiting risks

Doing business involves risks. As an entrepreneur, of course, you want to limit these risks as much as possible. Excluding all responsibility is not allowed, but devoting a few provisions to limiting certain risks is convenient. For example, you cannot exclude liability if you fail to deliver, but you can often stipulate that liability is limited to a certain amount. Note: there is a big difference when you are dealing with other companies (B2B) or consumers (B2C). When dealing with consumers, you have less freedom when drafting general terms and conditions. Read my blog on the differences between drafting conditions on B2B and B2C here. 

Unifying business processes

General terms and conditions are standard clauses under which a company indicates it wants to do business with another party. They are clauses that apply as preconditions around agreements and they are meant to be used several times in different contracts with buyers and suppliers. It saves your company time and costs not to keep redrafting all these terms in separate agreements. After all, in offers or purchase agreements with customers, you only want to include core clauses: the quantity, price and other specific features of the product or service to be delivered. Peripheral issues such as delivery, payment and warranty are regulated in the general terms and conditions. Also, your business processes are unified when you use general terms and conditions. For every department within your company, it becomes clear where they stand. Take the finance department, for example, which knows it must take action when the 14-day payment term on an invoice has expired. 

I hope this blog has made it clear that general terms and conditions are indispensable for every (only) entrepreneur. General terms and conditions are your set of ground rules for customers and suppliers that make sure everyone knows where they stand with no room for differences in interpretation or discussion. In addition, you cover yourself by excluding certain risks and standardize your business processes, which makes doing business easier. Need help drafting your general terms and conditions? Feel free to contact me. 

If you are in a business that deals with technology, you may be familiar with the fact that there is no specific legislation for it. This means that creating contracts for your business can be a bit tricky.

However, businesses in the technology sector can create contracts for themselves without having to wait for legislation to be created. This is particularly true for A.I., blockchain, and other emerging technologies.

Engaging in contracts is a critical part of your business’s success. Unfortunately, there are many cases where the law is not yet settled, and you need to be able to create contracts for businesses in technology for which there is no legislation yet.

The first step is to know what the law says about contracts. You can look at past court cases for examples and ideas, or you can talk to a lawyer about what’s reasonable to include in your contracts.

Once you know what types of contracts are acceptable, you need to decide how these contracts will actually be implemented in your business practices. You might want a lawyer involved here as well, especially if you’re going into uncharted territory.

Always make sure that your contract is valid and binding. First of all, make sure that it is written down and signed by both parties. You can also have an independent witness present during the signing of the document if possible.

You should also consider having a lawyer review your contract before sending it out or signing it yourself if you are unfamiliar with legal matters or unfamiliar with a particular type of contract.

When your tech company is engaging in a contract in a field for which there is no legislation yet, take the following into consideration: 

1. Always define the terms precisely. This can be done by including a list of definitons at the beginning of the contract.

2. Make sure that you have included all required clauses and conditions needed to ensure that both parties understand their rights and responsibilities under the contract.

3. It is important to make sure that any information relating to pricing and payment has been included. This will help to ensure that there are no misunderstandings about how much money each party owes to the other, or when it will be paid.

4. If possible, try to include clauses relating to how disputes will be resolved if they arise between parties during or after their business relationship ends (such as arbitration).

Need help drafting or reviewing a legal document? Feel free to contact me.