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Saving time, money and disputes with proper standard terms of trade.

Has your business always always supplied goods and services on the basis of informal arrangements and trust? Suddenly fing a bunch of disputes and bad payers had arisen in a short space of time? It’s likely that if you have standard terms of trade in place, many of those problems could have been minimised or avoided.


So what are Terms of Trade? A written contract between the buyer and seller setting out the terms on which the parties agree to buy and sell between them. Not variable except by mutual agreement.


Why have Terms of Trade? Just like my clients, lots of businesses supply goods and services on informal arrangements largely based on trust. Inevitably disputes arise that could have been avoided if there had been clear, written terms of trade at the outset. Even more importantly, written terms help minimise and prevent bad debt.


What do Terms of Trade look like? A simple one or two page document should cover what most business need, and can be simplified down to the back of an order form or application for credit.


Some base examples of terms of trade clauses could include:

  • Parties: Properly identifying the legal names of the buyer and seller

  • Specify goods and services: The goods or services and the scope/dimensions should be clearly specified, including any additional items or work.

  • Price: Base price, whether plus or including GST and any other extras, whether it is an estimate or a fixed quote, and how long the quote or estimate is valid for.

  • Payment: Are the goods or services to be prepaid, cash on delivery, or credit? How long is the credit period? Have you a credit application for the buyer to complete? How and when will interest accrue if payment becomes overdue?

  • Supply and delivery: Time frame and method of delivery or collection, and which party pays for delivery costs. Are delivery costs specified in the estimate or quote?

  • Risk and Insurance: When does risk pass to the buyer? Is your business adequately insured for any damage or liability risks?

  • Reservation of title. When does ownership of the goods or services pass to the buyer? On payment? On delivery?

  • Statutory Obligations: Different legal rights and obligations apply depending on whether the seller is contracting with an ordinary person (a consumer) or a business, so be sure to identify who the client is and whether they have authority to enter into the contract.

Dotting your i’s and crossing your t’s:

Make sure the buyer signs agreeing to any quotes, as well as any credit application or terms of trade -before you start work or the goods or services are ordered/provided! And do review your terms of trade every 2-3 years.


If your terms of trade are inadequate it may be difficult to pursue a bad payer or resolve disputes. It is recommended you approach a lawyer to help you draft or review your terms of trade, or help you deal with bad payers.

Terms of Trade


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