There are so many things to work on once you decide to be self-employed. I am sure creating your Terms and Conditions is not high on your list of priorities and probably won’t even make the never-ending “self employed things to-do” list. Until a problem arises that is. And then you’ll really wish you had solid terms and conditions in place to protect you, your business and your revenue.
What you’ll find in this blog:
What are Terms and Conditions and why do they matter?
Terms and Conditions, (or T’s & C’s as they are commonly known!) are the rules that apply to your business relationship with your clients. I like to think of them as the framework within which your business operates. When your clients agree to do to business with you, they agree to that framework.
In Austria, there is a freedom of contracting – meaning, you are generally free to make your own agreements. If you don’t create your own terms, the minimum legal requirements will apply whether you like it or not.
If an issue is not regulated by the law and that issue becomes the subject of an argument between you and the other party, the result cannot always be predicted. And unpredictability in a situation like this, can cost you a lot – time, money, energy and potentially a business relationship.
If you have your own Terms and Conditions, however, they will serve as the applicable law (if they don’t contradict the national law, of course). Having your own T’s & C’s creates predictability and stability which, crucially, leads to sustainability.
It also simplifies your back office and admin work because you don’t need to explain everything to every single lead. Instead, potential clients can always check exactly how you operate. This prevents wasting your valuable time on people and businesses who will never become your clients in the first place. And, even more importantly, frees up the time you need to provide key information to those who will.
Top tip: Why not try putting your Terms and Conditions on your website? This is a little known but simply way increase your lead generation and sales. Remember, your website is the only one that is working for you 24/7. Give prospective clients the chance to make up their minds before they first contact you.
But how do you know what to include your Terms and Conditions?
Remember, you are free to create your own Terms and Conditions, as long they don’t contradict the law. There is no one size fits all, your Terms and Conditions can be as unique as your business.
The first thing to consider is whether you are doing business with customers (B2C) or with other businesses (B2B). Why? Because the legal requirements for contracting with customers are much stricter than those about contracting with other businesses.
As a self-employed business owner, a higher level of responsibility and presumed level of knowledge is applied to you, not the consumer. This places the consumer in a favourable position. It doesn’t really matter if you know how to run a business or not. Since you have decided to do conduct your business, you carry the risk and the responsibility of operating.
For you, as a business owner, Austrian and European law require you to include some compulsory provisions that means that in your Terms and Conditions.
An example of one of these mandatory provisions is the right of withdrawal. The right of withdrawal means that the client can change their mind and withdraw from the contract within a certain period of time (minimum 14 days for B2C businesses) – without giving any reason.
As an entrepreneur or small business owner, your Terms and Conditions should include details of the right of withdrawal for your clients. You can extend the period of time your client has to exercise the right of withdrawal, but you can’t make it shorter.
Remember, when preparing Terms and Conditions it’s not only about the meeting some legal requirements. It is essentially about setting clear, healthy boundaries for conducting your business. Terms and Conditions are about HOW you would like to do business.
Let’s take a look at some more specific steps below.
The basic requirements for T’s & C’s
Any terms and conditions must meet the following requirements:
- understandable
- not misleading
- not disadvantageous OR unusual to the other party,
- unambiguously clear for any of the parties that these conditions apply to their relationship with you.
Taking that into consideration, I have to say that I am not a fan of posh-sounding, fancy legal language when it comes to creating a Terms and Conditions agreement. Why not? Well, because you are not a bank or a mobile operator. And, because you want to encourage trust. Trust building is only possible if the other party has no problem comprehending your terms and does not feel like you are hiding something from them.
Chances are, there are many freelancers who can do what you do. This is unlike in the banking and mobile operator industry where the choice is so limited, that it feels like a monopoly instead. Your prospective client must want to work with you and therefore, they need to choose you over all others.
Take a look at the two example payment Terms & Conditions below.
If you were the client and had to choose a photographer based on their T’s and C’s, which one would you pick?
Photographer A
- Payment is due within 14 days from the date of the photo session unless otherwise agreed.
Or
Photographer B
- Unless a payment term has been expressly agreed in writing between the contracting parties, the fee is due for payment immediately after invoicing. If payment terms have been agreed upon, the submitted invoices are due within 8 working days from invoicing. The payment is free of charges and deductions.
I bet you picked Photographer A.
(Oh, and by the way, the second one is a quote from the template for Terms and conditions for professional photographers on the webpage of the Chambers of Commerce in Austria. Shocking, I know.)
Now you have gotten over the prejudice that your terms and conditions have to sound mysterious in order to be considered ‘professional’, let’s see what else you should do.
The importance of definitions
Avoiding misleading conditions requires you and your client to have the same understanding of important terms.
How can you make sure of it?
By defining the most important words and phrases you will be using.
Some examples: “the consultant”, “the client”, “the contract is concluded”, “in case of a delay”, “place of shipping”, “payment method”, “booking”, “cancellation notice”, “otherwise agreed”, “notify”.
Let’s take another look at the text from Photographer A’s payment terms:
Even in the simplified phrasing problems can arise.
“Payment is due within 14 days from the date of the photo session unless otherwise agreed.”
Imagine the client texts the photographer 5 days after the photoshoot – “I will pay you in a month, sorry!” and the photographer does not answer. Does this count as “otherwise agreed” or will the client still be expected to pay within the 14 days as required by the original Terms?
If you haven’t specified which channels of communication you use and how a change in your agreement can be made, a misunderstanding can arise very quickly.
To minimize the risk of misunderstanding, your next step is to ask yourself: What steps do my clients need to take when working with me? What is the process for buying my products or services?
- Is there any part of the process you would like to happen in any particular way?
- What could go wrong during the process?
- If something does go wrong, what should happen?
Once you’ve done that, identify words and phrases whose meaning might be unclear. And then, define them. (And make sure you don’t stray from your own definitions!) Use the process your clients go through when they work with you as a “path” to structure your Terms and Conditions.
Final Steps
It is time to lay down your rules for doing business. Some rules will be industry specific. Here are a few that will apply to any business in any industry.
- When is the contract between the business and client to be concluded?
- What does the service include? What is the product?
- How will the client be informed about that?
- What types of payment are available?
- When is the payment due?
- What happens if one of the parties breaches the contract?
- Privacy policy
- Cancellation policy
- Applicable law (country, continent, statute etc)
When you are finished, it is worth hiring someone to review your terms and conditions. You want to be sure that your T’s & C’s don’t contradict the law and that you haven’t missed something important.
You probably think your work here is done? That you don’t need to think of your Terms and Conditions anymore now they are written?
Not quite.
While you should certainly be proud of yourself for doing something significant to protect your business, your work is not finished. Just as your business will evolve, so will your terms and conditions too. Or at least, they should. Make sure to update them, so they always reflect your current stage of your business.
What happens if your client does not stick to your Terms and Conditions agreement?
Having solid, well thought-out Terms and Conditions doesn’t mean you will never have a conflict with a client.
Sadly, breach of contract is a common scenario in business. So, what happens then?
Most often than not, there will be negative consequences for at least one of the parties if someone breached the terms and conditions.
I say “for at least one” because even if you are doing everything to the letter, a breach of contract will still result in time wasted, delayed/cancelled payment, and ultimately, a conflict you need to deal with.
I can assure you, even if at the beginning of your relationship your client might not look at your terms and conditions but simply accept them – they will pay attention to them later in the case of conflict. If things go south for whatever reason, reading every single word and looking for weakness will be the first thing your client will do.
If your client has violated the terms of your relationship, you have two options.
- Let it go
- Fight them over it.
If you choose to go with option 2, make sure you have tried to solve the problem amicably first. Only then can you take more serious measures such as initiating court proceedings. This applies to both, B2C and B2B relationships.
There is, of course also a third option –
3. Mediation (click here how I can help with this).
While in a court proceeding there is always a winner and a loser, mediation offers a win-win outcome.
Mediation will be a good choice for conflict resolution if you wish to preserve the business relationship in B2B businesses.
In B2C relationships mediation is initiated predominantly by the consumer. There are official bodies that provide mediation in consumer rights-related arguments free of charge for the consumer.
If you are the one breaking your own Terms and Conditions, and your client finds out, they have the same options as above.
A Top Tip: if conflict happens, regardless of whose fault it is, make sure to take time and reflect on why it happened.
Did you miss something in your Terms and Conditions? Did you communicate clearly to the other party the need to really read them? How can you avoid this in the future?
And of course, get in touch with me and let me bullet-proof your Terms and Conditions in the first place. Then spend the time, energy, and money you’ll save by having clear working boundaries, on all the extra clients that chose to work with you!