Talk to TP about Terms of Trade
From a legal perspective, terms of trade are essential to your business. At Tavendale and Partners (TP) we encourage all businesses operating in New Zealand that supply goods or services to have current terms of trade in place that are accessible to clients.
Terms of trade do not come from a template. They are carefully tailored and specific to your business and clientele. They provide a framework for your working relationship ensuring clear communication of legal rights and remedies. They often include things such as conditions, limitations, liabilities, obligations, exclusions, and payment terms. Whilst many clients request their terms to be “short and simple”, those same clients are grateful to have thorough terms prepared, which are protective of their rights and interests, when faced with a dispute.
An issue we often assist clients with is recovering money where it remains unpaid – something we fear we may see more of in the current inflationary environment. A common misconception is that if an invoice remains unpaid you have a right, as a creditor, to charge penalty interest. This is not the case. To pursue a debtor for penalty interest you need to have disclosed the ability to do so and the penalty interest rate in your terms of trade. Therefore, it is essential your terms of trade cover: your rights if a client doesn’t pay, and your ability to enforce payment; your right to recover costs associated with debt collection; and, if possible, the ability to retain goods until payment is made.
A stitch in time saves nine; investing in thorough terms of trade is a cost that will more than pay for itself in terms of good business and risk management in the longer term. Your team at Tavendale and Partners is experienced at drafting and/or reviewing terms of trade and assisting where a dispute has arisen.
Want to find out more?
Please get in touch if you have questions about customising terms of trade for your business or need help with an issue that has arisen. Our team are happy to help you.