Stephen Robertson’s Post

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Legal Practitioner Director at SJR Commercial Law

What should you include in your trading terms? [Trading terms series - article #2] This week, I'm writing all about trading terms, to help get business owners on the right track - to explore what trading terms are for, how to make them work, what to include, and what to leave out. So, what are the key things to include in your trading terms? Here is my list of 'must haves': * Scope - it is essential to set the scope for what you're doing (and not doing). It's crucial to set clear boundaries for what work you're doing, what goods you're supplying, and where your responsibility starts (and ends). This is the area most often missed, in generic trading terms. *Enabling PPS words - If you will ever supply goods on credit - then you need appropriate wording to give you access to a PPS registration (Purchase Money Security Interest type). This is historically called 'retention of title' wording, though that phrase is a bit misleading under the PPS regime. [Note: this could go in the Credit Application which we will discuss in a later article in the series - but I prefer it in the main trading terms, to deal with 'accidental credit' situations]. * Limitation of liability - this must be in your trading terms. Remember that some (if not all) of your supplies will probably be Australian Consumer Law supplies, so you will need to comply with ACL requirements for those supplies at least. Consider the ACL consumer guarantees also - you may be required to include specific wording here. * Payment terms - these might (probably will) be on your quote / invoice or Credit Application, but I'm a fan of putting them in the main terms as a fallback (to help deal with process failures). I prefer the main trading terms to require the shortest payment period which is standard for the business, and for the credit application to be used to extend that (if credit is approved, and if credit is within the limit). * Interest and Costs - if you plan to recover them, then they need to be included. Also: send interest invoices if you expect to get interest paid. * Governing law - sometimes this can be inferred from the facts, but if you have multiple offices / shipping points and national customers - then this is essential. * Termination rights - I prefer a short term termination right which either party can use - this can de-escalate disputes and remove uncommercial incentives. This needs to be carefully assessed to your actual business circumstances - it's not suitable for some types of products - but can be very helpful. It amazes me how often the only termination clauses are based on default - that's usually a sub-optimal approach for you as the supplier. Tomorrow I will be writing about the 'nice to have' inclusions in trading terms as the 'all things trading terms' week continues. #tradingterms #commerciallaw #QldLaw

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Tony Shepherd

Global Communication & Negotiation Specialist, Lawyer, Musician & Author

1y

Very helpful, Stephen 👏

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Jane Toohey

Managing Director of Outsource2Us - your Marketing Team, driving growth for Australian and NZ business. Lead teacher at Haven Yoga Meditation, providing training in spiritual growth.

1y

Awesome Stephen thank you

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