Types of terms and conditions
Contract terms and conditions include express terms, implied terms, conditions, exclusions and penalty clauses.
Some types of contracts have implied terms that apply even if they are not included in the contract.
Are terms that are clearly stated and agreed when the contract is made. Express terms may be agreed verbally, written into the contract, or stated on a receipt or a notice at the counter.
Contracts commonly have express terms about:
- who the contract is between
- what is to be sold or supplied (products/ services)
- what the price is and the terms of payment
- when a job is to be started or completed
- when products are to be delivered.
These are terms that are not specifically stated but which are still part of the contract.
Implied terms are most commonly implied by statute – ie that kind of contract is covered by a particular Act. For example, contracts for the sale of goods have an implied term which guarantees that goods will be of acceptable quality (under the Consumer Guarantees Act). The consumer contract does not have to specifically mention the Consumer Guarantees Act.
Conditional contracts require certain conditions (or actions) to be met by one or both of the parties to the contract. Otherwise the contract does not go ahead – it becomes ‘void’. Both parties must agree to the conditions at the time the contract is made.
These remove some of the trader’s responsibilities if the contract is broken, eg:‘The manufacturer is not responsible for a fault if the goods are used in a way that is not intended.’
Exclusion clauses are not always clear, so always ask the trader what happens if something goes wrong with the goods when they haven’t been misused.
Any term of the contract that specifies an excessive amount to be paid by you for breach of contract, which is out of proportion to the loss that the supplier would suffer. Penalty clauses may not be valid or enforceable under contract law.
Understanding common terms and conditions
Common terms, conditions and clauses in a contract or agreement include:
Sets out who the contract or agreement is between. This usually means clearly identifying the seller, eg business, trader, retailer or service provider, and the consumer, eg buyer, customer or client.
How long the contract or agreement will last.
Entire agreement clause
Makes it clear there are no other terms apart from what’s written in the contract or agreement. If a problem occurs, the written contract or agreement alone will set out the rights and obligations of both you and the seller.
A seller’s promise that the product or service is what they claim it to be.
The promises a seller makes to you when you buy a product or service. Usually, warranties will include your rights as a consumer if something goes wrong. Some warranties, such as extended warranties, may provide promises over and above the law, eg the ability to return an item you accidentally damaged.
Your warranties may not be fully written out in the terms of your contract or agreement. If the terms state you have “implied warranties”, this includes all of your rights under laws, eg the Consumer Guarantees Act.
Spells out the protections that both you and the seller have when you enter a contract or agreement. Typically, the purpose of an indemnity clause is to limit a seller’s responsibility for any loss or damage that may occur.
Remember, no matter what the indemnity clause says, you still have rights under consumer laws if something goes wrong.
States the situations when the seller can be excused from their obligations in a contract or agreement for reasons outside of their control, eg earthquakes and other natural disasters.
Breach and termination
Spells out when you or the seller can end the contract or agreement. Typically, you or the seller can end the contract or agreement if the other party doesn’t follow the terms of the agreement. Contracts or agreements may end for other reasons, eg force majeure.
Look out for any cancellation fees you might have to pay if you end a contract or agreement early.
Typically outlines which country’s laws apply to the contract or agreement. It may also include information on which country, or court within that country, will deal with any legal action or proceedings if there’s a dispute between you and the seller.
Make sure you read the seller’s privacy policies, particularly if you buy online from an overseas retailer.
Different countries have different laws about how a seller can use your personal information.
Outlines when a seller or business can transfer your contract or agreement — or your particular rights under them — to another seller. For example, if your internet provider is bought out by another business, your contract can be transferred to the new business.
Sets out the situations when you or the seller have the power to change terms of the agreement, eg the amount or frequency of payments.