Many small to medium sized businesses supply goods and services on the basis of informal agreements. Sometimes disputes between the parties can arise out of misunderstanding as to what the agreement really is. In most cases having a written “Terms of Trade” can avoid this sort of misunderstanding. Simply put, the Terms of Trade are the terms of the contract between the parties. Terms of Trade can also assist in standardising transactions, managing debtors and minimising bad debt.
As of such, it is fully recommended that every small to medium sized business should have its own Terms of Trade.
Some common matters included in Terms of Trade:
- The Parties
- The Goods or Services Provided
- The Price
- Time to Pay
The Terms of Trade does not need to be lengthy or complicated – it is recommended however that they are written in a simple and straightforward manner as to avoid any confusion between the parties. However you should be wary that if they are too simple or brief they may be considered inadequate – you might as well not have any Terms of Trade at all! It is advised that you should always seek legal advice when drafting your Terms of Trade. Should you require legal assistance, please do not hesitate to contact Phang Legal for a consultation.