Terms and conditions
Each and every commercial transaction is actually a contract between the Seller and Buyer and minus a writing expressing the terms, it becomes an oral contract with all the problems inherent in proof and expense that oral contracts necessarily entail. (See the Article on the Web Site relating to Contract.) Put simply, it will be a question of veracity as to who the judge or jury believes in any dispute as to what were the terms of agreement and such uncertainty is precisely what businesses must avoid.
absent a written agreement
In the United States, attorneys fees are not awarded to either party absent a written agreement so specifying. Further, arbitration can only be imposed if the parties so agree. With court cases sometimes taking years to get to trial, and with attorneys fees often equaling tens of thousands of dollars, Sellers often discover that it is cost prohibitive to attempt to collect for sums owed unless they have appropriate ways to avoid the expense and delay of American courts.
written agreement between seller and buyer
For that reason, any sophisticated business will utilize standard terms and conditions of sale for each and every transaction and normally create a standard form with multiple copies created by carbon of different colors, two of which are sent with the product with directions to the shipper not to release the product until the Buyer signs the shipping document which includes written terms and conditions which are binding on the parties. The form, often called a Shipping Form or Invoice, itemizes the products or services rendered, the price and delivery terms, and most importantly, a set of written terms and conditions pertaining to the sale. When the Buyer receives the products from the Shipper, the Buyer signs for the products and a copy of that form is left with the buyer with the signed copy being returned to the Seller. That becomes a binding written agreement and allows the Seller to effectively and efficiently enforce the terms.
standard generic terms
Below are standard generic terms and conditions which our office recommends to Sellers. Particular terms would be required for specific industries. Thus, certain manufacturers would add specifications and allowed tolerances, sellers of produce would include means of shipment and spoilage tolerances, etc, etc. The key is the terms that allow effective and inexpensive means of enforcement via arbitration or Small Claims court (if the amount in controversy is small enough.)
Near to seller
It should also be noted that this allows the Seller to avoid being pulled into a hostile jurisdiction, perhaps far from the Seller’s locale of business.
International transactions require additional clauses of key import, such as issues of customs and payment by Letter of Credit. The terms below are illustrative of the basic ones which would be expanded for most transactions.
battle of the forms
One must also be aware that many sophisticated Buyers have their own terms and conditions on their Purchase Orders which they seek to enforce and quite often there is the “battle of the forms” in which both sides have form terms and conditions on their contract papers and each include clauses which claim that the others’ terms and conditions are superseded by their own forms. Normally, courts will refer to the standard terms and conditions of the Uniform Commercial Code to determine which clause will prevail as well as determining who was the last to execute which document, often finding that the last document executed is the binding one. Each case is decided on a case by case basis and the safest course of conduct is for the Seller to carefully review the Purchase Order before shipping and simply indicate to the Buyer that absent a written waiver of their Purchase Order, no shipment will occur.
The limitation on warranty clauses are often not enforceable against consumers but often can be enforced in transactions between merchants…and, at the least, give some defense to the Seller.
And the attorneys fees clause often stops any trivial or invalid refusals to pay since most Buyers will hesitate before putting themselves in the position of having to pay not only their own attorney’s fees, but those of the opposing party! It is the type of provision which may stop costly litigation before it begins.
The terms below should be reviewed with legal counsel before being sent to the printer for inclusion in the contractual documents used in the commercial setting. Buyers may wish to review our suggested terms and conditions for Purchase Orders contained elsewhere in the Retainer Website.