Standard Terms in General

Standard terms may be general terms and conditions unilaterally drafted by the company itself or drafted for companies by its representative trade association. Alternatively, the standard terms may be drafted by a trade association representing both parties and are then called “agreed documents”. For instance, the standard terms of construction YSE-1998 have been drafted in co-operation with both the representatives of the clients and the contractors. Use of standard terms is very common.

The term ”general terms and conditions of contract” is best suited to describe provisions drafted jointly by the representatives of both parties, whereas the term “standard terms of contract” best describes provisions unilaterally drafted by the company itself.

The purpose of using standard terms is to speed up the conclusion of contracts. The conditions are the same for all customers and thus save time, as there is no need to negotiate the same conditions of the contracts separately for each party. Standard terms are suitable if the company regularly e.g. sells or purchases services or hires machinery for the same purposes. Standard terms may also set out the duties and obligations of the parties in detail. A common criticism regarding standard terms is that contracts often refer to standard terms that are not necessarily suitable for e.g. the hire of the desired service. This may be because the party using the standard terms is unfamiliar with the contents of the terms. The terms may also be unreasonable from the other party’s perspective.

When utilizing standard terms and conditions, it's essential to acknowledge that they might be unsuitable for some individual circumstances. When the other party proposes their own standard terms and conditions, it's important to read through them carefully. This allows a party to ensure that the terms and conditions do not contain limitations of liability, for instance, that the other party may not be willing to accept. If, following negotiations, the parties agree to modify or eliminate certain conditions, these adjustments should be documented either within the individual agreement or directly within the standard terms and conditions appended to the agreement. Typically, it is preferable for amendments and deletions to be agreed upon within the detailed individual agreement between the parties, as the agreed-upon terms take precedence over the standard terms and conditions. Furthermore, personnel from the standard terms and conditions provider may assume that the actual standard terms and conditions remain unchanged, making it more likely for changes to be recognized within the supply contract.

Standard terms and conditions provide a good framework for the agreement but are not a substitute for the agreement itself. It is worth investing in the drafting of good contracts and the expedient use of terms and conditions. It is possible to agree more favorable terms for the company using standard terms and conditions than what is permitted by e.g. the Sale of Goods Act. Small and medium-sized companies are usually obliged to accept the standard terms and conditions of larger companies. Under these circumstances, it is particularly important to read the standard terms carefully. If possible, it is also advisable to negotiate e.g. onerous warranty or liability clauses to agree on them separately.

There are special regulations in respect of consumer sales. See [Consumer Protection and Product Liability].