For many entrepreneurs, the subject matter of drafting business terms and conditions might not be their top priority. However, their businesses can be adversely affected if they don’t address the matter early on. This is in part because an entrepreneur’s business or transaction conditions should govern the relationship they have with their clients right from the start. Indeed, once a contractual relationship has been established, through a purchase order, for instance, and there is—legally speaking—an agreement, it becomes very difficult to make changes. Also, without well-drafted conditions, the parties to a contract can face detrimental consequences, such as unlimited liability claims or the triggering of foreign dispute resolution rules they weren’t aware of or weren’t expecting.
(Author: Nicolas Roland, Stibbe / Image Credit: Bethany Legg)
Entrepreneurs should set out these conditions in a proper way: both in terms of their content and how they are displayed. For instance, the European Court of Justice recently held that for distance selling consumer contracts (i.e., where there is no face-to-face contact between buyer and seller), providing the sales conditions only by way of a hyperlink is insufficient. Also, as a general principle under Belgian case law, the burden lies on the entrepreneur to prove that a client has been duly informed of the conditions and has agreed to them.
Furthermore, these conditions must clearly lay out the company’s position on all important matters, and include terms that cover the definition of the products and/or services to be provided, the governing law and the liability mechanisms. In this regard, it is worth mentioning that, unlike French and Luxembourg law, under Belgian law, liability for gross negligence (i.e., in the sense of wrongdoing that is so grave that it is inconceivable by a professional person, faute lourde/zware fout) can be validly excluded in a B2B contract. Once again, clearly drafted provisions are required because the Belgian Civil Code authorizes the judge to construe any poorly drafted or ambiguous provision against its author.
Finally, having all of the terms and conditions in writing helps entrepreneurs comply with the law. For example, in certain circumstances, such as with regard to the existence or absence of a withdrawal right, entrepreneurs are legally obliged to provide their clients with certain information in a timely manner.
In a nutshell, if you don’t clearly specify your business or transaction terms and conditions, you put yourself at risk of uncertainty and misunderstandings, which can be detrimental to your interests. And that isn’t good for a startup trying to develop and grow its promising business!
This article was first published in SILICON