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Supply of services contracts

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Joanna Convey

Solicitor

Commercial law

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Are you providing services to businesses or consumers?

Is it possible to completely limit your liability?

If you provide a service it is important that you have written terms and conditions. In the absence of written terms, the Supply of Goods and Services Act 1982 provides for implied terms in every contract regarding:

  • standard of performance of the services;
  • time for performance of the services;
  • price of the services.

A customer will want as few limitations as possible, and, if possible, to increase the amount they can recover from the supplier if things go wrong. Conversely, a supplier will want to restrict their liability under the contract as far as possible.

The Unfair Contract Terms Act 1977 applies to supply of services contracts, and as a supplier you should be mindful that if a restriction of liability does not comply with applicable legislation it will be wholly unenforceable, with the result that you will be liable for your customer’s losses (subject only to common law rules on recovery). Consequently, drafting limitations of liability is not something that should be undertaken without obtaining proper legal advice.

Other matters that you would wish to consider relate to service levels, consequential or indirect loss, and time for performance of the services.

It is important to clearly state payment terms in any commercial contract otherwise you may encounter difficulty in recovering debts in the event of a dispute. As a supplier you need to ensure that you specify the time for payment (i.e. 30 days’ after invoice/month end) and that time for payment is of the essence. It is also important to exclude the customer’s right to make deductions or withholdings. You may wish to consider providing for interest on late payments or a discount for early settlements.

The commercial team at Myers & Co can help you to prepare bespoke or standard terms and conditions of supply. We can ensure that you can effectively limit your liability and ensure that you are confident they will be enforceable.

Based in Stoke-on-Trent, Staffordshire, our commercial lawyers have a reputation for providing accurate advice, and dealing with complex problems in an efficient manner.  For further advice contact Myers & Co Solicitors on 01782 577000.

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