The quick answer is, legally, probably not! However, as always with law it’s not quite that simple!
When you need a contract
There are certain instances where a written contract is required by law – such as for the sale of property or data processing provisions – but these are limited.
In other instances, it might be a legal requirement to provide certain information in written format, but not necessarily as a contract – e.g. the sale of goods to individuals via the internet, where you have to provide specific information, such as regarding the right to refunds, but this doesn’t mean you need T&Cs as there are other ways you may provide this information.
So why might you want a contract?
There are a number of reasons to have a contract which include…
Manage risk
A contract is primarily a risk management tool.
A key example of this is limitation of liability – i.e. what you are and aren’t responsible for if something goes wrong. If there isn’t a contract (or the contract is silent) then the sky is the limit as to what you may be liable for under the contract. A contract written in your favour will contain various exclusions and also a cap on your liability, meaning you can limit your level of liability under the contract.
Also if there is nothing in writing then the law fills in certain gaps, which won’t always be in your favour – such as some intellectual property rights which will automatically belong to the party which creates them unless there is anything agreed to the contrary. So if you’re using a third party to develop something which is core to your business, you need the right to use/ own it! See “Silence is Golden (or is it?)”
Clarity
A contract does not need to be in a written format, such as T&Cs. Even in the absence of a formal document, a contract is likely to exist – such as the content of conversations and emails. For more info see “FAQ: What is a contract? (And a brief history of football!)”
The benefit of having everything documented in one place is that there is less scope for arguments down the line over exactly what was agreed.
Imagine a situation where you are negotiating the specifics of a deal – there is likely to be several back and forths over email or telephone with the spec and price being negotiated. For an example of when things go wrong due to this back and forth see “CASE CORNER: The £1.3 million email! Superdrug v Athena”.
Control
Having an arrangement based on your T&Cs means that you can control the relationship – as the T&Cs will likely be drafted in your favour and reflect your business practices.
This means you set out exactly:
what you will and won’t do for the price – including any parameters or assumptions
how and when you will provide goods/ services
how changes will be managed
etc
Get in touch if you would like to discuss your contract requirements. Contact Alison on alison@law-point.co.uk or call 01202 729444.
