Establishing business terms and conditions

By  Stephanie Oakley
Category: Business

Establishing terms and conditions for your business provides clarity and protection for you and your clients. Otherwise, your business could be at risk of legal and financial stress.

The terms and conditions of a business act as a contract that aims to protect intellectual property, control liability and enforce rules. This can help to prevent disputes and save time and money on collecting debts. Specific terms and conditions can be the difference between chasing up late payments to ensuring your business gets paid first.

While there is no legal requirement to include terms and conditions on invoices, it is highly recommended that you establish written terms and conditions in case things go wrong with one party. The terms and conditions you decide to incorporate will vary depending on your business’ needs, but generally should include some variation of the following topics:

business terms and conditons


Goods and services

A clear definition of the goods and/or services that will be provided. Including a section for definitions of the words you use throughout your terms and conditions will prevent any misunderstandings or misinterpretation.


Price and payment terms

The price should be defined and state whether GST (or other taxes) are included or not. The payment terms should outline when the payment is due and if the price is payable in cash on delivery or on pre-agreed terms.


Warranties or guarantees

Include any warranty that will be provided, the warranty period and clearly outline any limitations under the warranty. If you offer any guarantees, be sure to include them and remember guarantees should be given before any goods and services are provided.


Credit terms

If credit is provided, include the credit terms, limits and any penalty or default terms. It is important to request permission to conduct a reference check to verify the creditworthiness of the other party before providing credit. Remember, offering credit increases your chances of receiving a late payment, or not being paid at all, so consider upfront payment or payment on delivery for customers with large payments.


Defaulting and terminating

Specify what will happen if either party does not deliver or pay on time. The terms should also state what notice is required to get out of an agreement or if one party wants to end the relationship.


If you need any assistance with establishing or assessing your business' terms and conditions, speak to our business advisers.


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