Terms fail on the bad day, not the good one
Nobody reads terms and conditions while things are going well. They get read when an invoice is ninety days late, when a customer says the work is not what they asked for, or when someone wants to walk away. That is the only moment terms have to do anything, and it is the moment most sets of terms turn out to be thinner than their owner remembered.
The failures are boringly consistent. Terms sent out with the invoice were never part of the deal. A liability cap set in 2019 against contracts worth four times as much. Nothing at all about who owns the work, discovered by two parties who each assumed they did. None of these are drafting problems. They are questions nobody was asked, which is why a checklist gets you further than a rewrite.
What terms and conditions are actually for. Three things, in order of how often they matter. They fix what each side has promised, so an argument about scope has somewhere to go. They decide who carries which risk, which is what a liability cap, an indemnity and an insurance requirement all are. And they set out how the relationship ends, whether that is at the end of a notice period or in the middle of a row. Everything else in a set of terms is detail hanging off those three.
Terms of business, terms and conditions, terms of service
Three names, used loosely, and the looseness causes real confusion when someone goes looking for the right document.
Terms of business is what a professional services firm usually calls them - an accountant, a consultancy, an agency, a recruiter. They cover the engagement: what you are being retained to do, what you charge, what you are not responsible for. If you sell expertise rather than products, this is your phrase, and it is the one to search for when you are looking for a precedent that fits.
Terms and conditions is the general commercial phrase, and the one most people reach for. It covers the same ground and rather more, and it is what you want for selling goods, services or a mix of the two.
Terms of service has quietly become the software word. Search it and you will get Google, WhatsApp and app stores, because it now signals a licence to use a platform rather than an agreement to do work. If you sell software or run a subscription it is the right name. If you sell your time, it is not, and using it invites the wrong assumptions.
The check below does not care which you call yours. The questions are the same either way, because what decides whether a set of terms works is when it was agreed and what it is silent about - never what it is titled.
What the three results mean
The check does not give you a score out of ten. A score invites you to feel broadly fine and get on with your day, which is exactly the wrong response to a real gap. Instead it lands on one of three positions, chosen by the most serious thing it found rather than by counting.
Your terms are doing their job.
Nothing here looks broken. Your terms get agreed before the work starts, they say what happens when it goes wrong, and someone has looked at them recently. Keep the review in the diary and get on with the business.
Your terms work right up until they are tested.
The paperwork exists and it is properly agreed. What it does not do is answer the questions people ask once something has already gone wrong - who pays, who owns what, how anyone gets out. Terms earn their keep on the bad day, not the good one, and there are a few things here worth closing before you need them.
Your terms are not protecting you.
On what you have told me, there is a real gap between what you think you have agreed and what you could hold someone to. It is worth an hour, not a project, and it is much cheaper to fix now than during an argument.
The gaps, and what each one costs you
These are what the check is looking for, in the order they matter. The first two are the ones which make the rest academic, because a set of terms nobody agreed to is not a set of terms at all. The last few are not faults at all - they are the clauses your particular line of work is argued about most, and the check points you at whichever one applies to you.
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No terms at all
Every deal runs on whatever was said in the emails. You may well still have a contract - English law does not require a signed document - but nobody knows what is in it, including you.
The commercial contract guide -
Not incorporated
Terms which arrive with the invoice were not agreed. The contract was formed earlier, when the customer accepted the quote, so at the moment you need your terms most they are not part of the deal.
Can you write your own contract? -
Someone else's terms are winning
If you sign their purchase order and they never signed yours, you are working on their paperwork and their allocation of risk. On larger contracts that is usually where the money goes.
The commercial contract guide -
Consumer customers, business terms
Selling to consumers brings rights you cannot write away, plus cancellation periods and fairness rules on the terms themselves. A clause which is robust against a business customer can simply not bind a consumer.
Can you write your own contract? -
Uncapped liability
With no cap, the ceiling on a claim is whatever the loss turns out to be, not what you were paid. Some things cannot be capped and should not be. Everything else is a number you get to choose in advance, once.
The contract disputes guide -
A cap nobody has revisited
A fixed sum set years ago, against today's contract values, is a number with no relationship to the risk. It may now be far too low to matter, or high enough to be worth nothing to you.
The contract disputes guide -
Nothing behind the payment date
A date with no interest and no right to stop work is a request. Late payers respond to consequences, and the consequence has to be written down before it is needed.
What is a clause in a contract? -
Ownership unsaid
Where terms are silent on who owns the work, the default is often not what either side assumed, and it surfaces at the worst possible moment - usually when the relationship is ending and the customer wants the files.
The commercial contract guide -
No exit route
A contract with no notice provision ends when both sides agree or when someone breaches it. Neither of those is a plan, and the second one is expensive.
Varying and terminating a contract -
Locked in
A fixed term with no break clause is a commitment for the whole term, whatever changes in the meantime - your costs, their behaviour, the market.
Varying and terminating a contract -
Silent on law and jurisdiction
Where the terms do not say, it gets decided for you, possibly abroad. The argument about where to have the argument costs more than the clause ever would.
Governing law and jurisdiction -
Out of date
Terms written for the business you were are not terms for the business you are. What you sell, who you sell it to and what it is worth have all moved since, and the paperwork has not.
The commercial contract guide -
For professional services: scope, and who may rely on it
Most complaints against a professional firm are a version of "you should have spotted that", which is an argument about what you were engaged to do. So the scope schedule is the clause doing the real work, and it is worth a line saying who may rely on your output - so a client's bank, buyer or investor cannot treat work done for them as advice given to it.
Terms of business by profession -
For recruitment: what counts as an introduction
The whole commercial model rests on it. Check yours defines the introduction, sets how long it lasts, says what happens when a candidate is passed to a group company or another client, and sets out the rebate position if a placement does not stick. Vague wording here produces unpaid invoices rather than formal disputes, which is worse - there is nothing clear to enforce.
Terms of business by profession -
For agencies: ownership, approvals and third-party licences
Three things worth checking. Who owns the work and from when - ours until paid is the sensible default. Whether sign-off has to be in writing, because "we approved that" is the whole argument when a campaign underperforms. And who carries the risk on stock, fonts and music licences, which agencies routinely carry without noticing.
Terms of business by profession -
For IT and software: service levels, and the data question
Check your terms say what available means, how it is measured, and what actually happens when you miss it - a service credit is a remedy, an apology is not. Then check they say who is controller and who is processor for personal data. Getting that label wrong moves a set of statutory duties onto a party who has not priced them.
Terms of business by profession -
For construction and trades: variations, and a statutory catch
Work changes on site, and if variations are not priced in writing you end up arguing about a conversation. The unusual part is payment: for most construction contracts a statutory payment regime overrides whatever your terms say, including the notices each side must serve and the deadlines for them. You cannot draft around it, so terms need to sit inside it rather than against it.
Terms of business by profession -
For selling goods: title, risk and delivery
Three questions a service business never has to answer. When does ownership pass, when does risk pass, and are they the same moment - retention of title until payment is the usual protection. Then what happens when a delivery is late, short or refused, and how long a customer has to inspect and reject.
Terms of business by profession -
The answers you were not sure about
On at least one question the honest answer was that you did not know. That is a finding in itself. Terms you cannot summarise from memory are terms you are not relying on, and the fix starts with reading them rather than redrafting them.
The commercial contract guide
Frequently asked questions
Do I legally need terms and conditions?
No law requires them. A contract can exist with nothing written down at all, which is precisely the problem - if you have no terms, you still have contracts, they are just made of emails and assumptions. Written terms are how you decide in advance what those contracts say, instead of finding out afterwards.
What is the difference between terms of business and terms and conditions?
In substance, very little - both set out what each side has to do and who carries which risk. The difference is convention. Professional services firms, such as accountants, consultancies and recruiters, tend to call them terms of business, because the document governs an engagement. "Terms and conditions" is the broader commercial phrase and covers selling goods as well as services. Terms of service is different again: it has become the software word, and signals a licence to use a platform rather than an agreement to do work.
Are my terms and conditions legally binding?
They bind the customer if they were brought to the customer's attention and accepted before the contract was formed, and if the terms themselves are enforceable. Signature is the cleanest evidence but it is not the test. Terms sent after the deal was struck, or buried behind a link nobody had to pass through, are the two ways this usually fails.
What should terms and conditions include?
What each side has to do and by when, what it costs and when payment is due, what happens if payment is late, who carries which risks and up to what limit, who owns what is produced, how confidential information is handled, how either side ends the arrangement, and which country's law applies. Anything beyond that is detail hanging off those.
Can I copy terms and conditions from another website?
It is a bad idea twice over. The terms are someone else's copyright, and more practically they allocate risk for someone else's business - their delivery model, their insurance, their customers. Copied terms tend to be simultaneously too heavy in the places you do not need and silent in the places you do.
How often should terms and conditions be reviewed?
Once a year is a sensible rhythm, and immediately whenever something structural changes - a new product line, a first consumer customer, a first overseas customer, a step up in contract size, or a claim which the terms handled badly. The trigger is usually a change in the business rather than a change in the law.
What is the difference between terms and conditions and a contract?
Terms and conditions are the standard part - the clauses you use with every customer. The contract is the whole agreement, which is your terms plus the specifics of the deal: the customer, the scope, the price, the dates. One set of terms sits underneath many contracts.
If the check turned something up
Silva drafts, reviews and rebuilds business terms every week - in plain English, with the risks flagged and the price agreed before the work starts. A single set of terms is usually a fixed fee. If contracts are a steady part of the business, a retainer is the cheaper way round.