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Understanding how sales contracts work and what selling regulations apply to your business is more than just a matter of compliance. The right approach to sales agreements will ensure that your terms of trade apply to any commercial contract. Creating and enforcing standard contracts and sales practices can help minimise the risk of disputes and protect you against legal claims
Sales contract basics
Drawing up standard contracts and terms of trade tends to be a good investment – the initial outlay will quickly prove worthwhile if something goes wrong with a customer. But the whole exercise can be futile unless sales people understand the basics of contract law and how legal contracts work.
The key issue is when the sales contract comes into existence – when an offer is made and accepted. Unless your terms of trade have been agreed before this, they don't apply. At the same time, anything salespeople have promised is likely to become legally binding if the customer is relying on it. This applies whether a salesperson has agreed something in writing or not. Key things to remember are:
- Agree your terms of trade before an offer is made and accepted.
- Do not promise something verbally that you later do not deliver - if the customer is relying on it you could be in breach of contract even if it's not in writing.
Unfair trading and consumer protection regulations
You can comply with most sales regulations in one simple step – by avoiding unfair trading and misleading marketing. Although the detailed requirements are extensive, common sense and an honest approach to doing business covers most of the ground.
Under the Sale of Goods Act, any products you sell must at least match their description, be of satisfactory quality and suitable for their purpose. Similar requirements apply to sales of services.
Individuals who buy from you have additional consumer rights. For example, if you hide unfair terms of trade in the small print of your sales contract, consumers are unlikely to be legally bound by them.
Other key selling laws
If you sell at distance – online, by mail order or phone – the Consumer Contracts (formerly Distance Selling) Regulations apply. Amongst other things, these give consumers some rights to cancel purchases. Electronic sales (eg online) are covered by similar rules even if you are selling to business customers, but without the cancellation rights.
Other selling regulations cover areas such as offering consumer credit (which generally requires a licence) and data protection for customers' personal information. There may also be special sales regulations applying to your particular products or services. An initial legal review from a solicitor will quickly highlight the main issues you need to be aware of and what you need to do about them.