Understanding the importance of incorporating trading conditions

Running a business comes with its fair share of risks, and one of the biggest challenges is ensuring that your terms and conditions are legally binding. Incorporating your trading conditions properly can mean the difference between a smooth transaction and a costly dispute. But how do you make sure your terms are enforceable? Let’s break it down.

What are Trading Conditions and why do they matter?

Your trading conditions set out the rules of engagement between you and your customers or suppliers. They outline both your own and your customers responsibilities for matters such as descriptions and particulars of goods, liability compensation, time limitations, dispute resolution, and more. Without clear, well-drafted trading conditions, you leave your business vulnerable to misunderstandings and legal issues.

For businesses operating in the freight forwarding and logistics industries, the British International Freight Association (BIFA) provides industry-standard terms and conditions that help protect businesses by clarifying responsibilities and liabilities. Many companies choose to adopt BIFA’s terms to ensure they are operating within recognised industry guidelines.

Making sure your terms are legally binding

For your trading conditions to be enforceable, they must be properly incorporated into your agreements. This means ensuring that your customers and suppliers are aware of them before any contract is formed. Here’s how:

• Clearly reference them in contracts – Ensure that your terms are mentioned in all order forms, invoices, quotations, and agreements.
• Provide a copy – Always make your terms easily accessible, either in print or online.
• Get express agreement – If possible, obtain written confirmation from the other party that they accept your terms.
• Ensure they are consistently applied – If your business uses different trading conditions for various logistics operations, be clear on which version applies to which operation.

Hazel Downes, Head of Marine and Logistics, advises: “When I speak to clients, I always emphasize the importance of making trading conditions easily accessible – ideally, in full on a company’s website, with a direct link in the email footer. It’s also crucial to ensure the footer appears across all devices, including mobile and tablets, so the incorporation statement is always visible. This step helps reinforce transparency but remember – an email statement is just one part of the incorporation process.”

Common pitfalls to avoid

Even with well-drafted terms, mistakes in incorporating them can render them unenforceable. Here are some common errors:

• Burying them in the fine print – If your terms are hidden or not clearly referenced, they may not be enforceable.
• Introducing them too late – If you present your terms after a contract has already been agreed, they may not apply.
• Failing to update terms regularly – Business and legal landscapes change, so make sure your terms are always the most up to date version and correctly referenced.
• Not referring to industry standards – Many businesses fail to align their trading conditions with recognised industry standards, such as BIFA’s Standard Trading Conditions, which provide a strong legal framework for freight forwarders and logistics firms.

Customers using their own purchase order agreements – Customers may accept a quotation and submit their own purchase order form which contain their own conditions for placing the order. These should not be accepted and a response should be sent to confirm that the order is accepted under your own trading conditions.

How to strengthen your trading terms

Adopt industry recognised terms – If applicable, consider using BIFA’s Standard Trading Conditions or other industry recognised trading terms to align with best practices in logistics and freight forwarding.

If you use your own trading terms you want to ensure your trading conditions are rock solid, consider the following:

• Consult with a legal expert – A professional can review your terms and highlight any weaknesses.
• Use clear and concise language – Avoid overly complex legal jargon that could cause confusion.

Include key protective clauses – Such as limitations of liability, time limitations for claims, and dispute resolution mechanisms.

Why this matters for your business

Failing to properly incorporate your trading conditions can lead to major legal and financial issues. By taking the right steps to ensure they are properly communicated and agreed upon, you protect your business and set clear expectations with your customers and suppliers.

Your insurance policy responds to your contract terms which are generally specified on the policy schedule, your policy may have specific conditions requiring incorporation and if you have failed to comply with these conditions may not respond to a claim.

If you’re unsure whether your terms and conditions are properly incorporated, now is the time to review your processes. Need expert guidance? We’re here to help ensure your trading conditions work for you, not against you.

Email marine@macbeths.co.uk or call on 0118 916 5480