General terms and conditions: why they make sense
- Jeanine Hoekstra
- How to
- 10 Feb 2022
- Edited 6 Feb 2023
- 2 min
You do not have to draw up general terms and conditions, but they can save you a lot of trouble. The general terms and conditions set out the rules you have for doing business. For example, whether your quotation is binding. And your delivery time. You can refer to them, should you have a difference of opinion with a customer or client. But there is more to it than drawing up a set of rules. Read what you can and cannot include in your general terms and conditions, and how you use them correctly.
Why draw up general terms and conditions?
General terms and conditions make clear from the start what the respective rights and duties of you and your customers are. The so-called 'fine print' will save you a lot of time. Your customers will know straight off what they are dealing with. General terms and conditions can decrease the risks you are running as an entrepreneur. Important issues which the general terms and conditions can cover:
- Liability: As an entrepreneur, in principle you can be held liable for all direct and indirect damage. Although you may never rule out your liability entirely, you can limit it via your terms and conditions.
- Payment term: The legal payment term for invoices is 30 days. If you want a shorter payment term for your invoices, you will need to have explicitly agreed this via your general terms and conditions or in a contract. It is also possible to extend the payment term.
- Retention of title: By including retention of title, you can ensure that as an entrepreneur you remain the owner of the item you deliver. This means that as owner, you have the right to reclaim the item as long as the invoice has not been paid. This also is the case if your counterparty goes bankrupt or into liquidation.
- Guarantee: If you are selling to consumers, your general terms and conditions may not infringe upon the legal guarantees that customers have. This is different than in sales to entrepreneurs, where there is more flexibility.
- Cancellation policy: If you provide services, in particular events, entertainment, or holiday accommodation, your terms and conditions may include your cancellation policy. Your cancellation policy outlines what the conditions for cancellation are, such as the cancellation period and any costs associated with cancellation.
Upon booking a service, such as an event or a holiday, you ask your customers to agree to your general terms and conditions. Your general terms and conditions also contain your cancellation policy. Cancellation is the dissolution (termination) of an agreement after the booking has been made. Both you and the booker can cancel the agreement. In the cancellation policy you describe within which period the customer may cancel your service, for instance a holiday accommodation. And which costs they have to pay.
You may also describe the conditions for the customer to be allowed to cancel. In the event of cancellation, the customer often has to pay you a percentage of the booking amount. Even if they do not make use of the service. How much the customer has to pay depends on when they cancel the service. The earlier the customer cancels, the lower the percentage they pay. Does the customer cancel the booking last-minute? Then you can force them to pay (nearly) the full booking amount.
In case of a holiday accommodation, you can also consider refunding the holidaymaker if they arrange a replacement customer for the accommodation in the booking period. You are then entitled to charge the holidaymaker administration costs. Would you like to know more about good cancellation policies? Your sector or trade association can provide policy examples.
Drawing up general terms and conditions
Ensure that you draw up your general terms and conditions correctly right from the start. This will limit the risks that you will be running as entrepreneur. If any mishaps do arise, you will be happy that you have them. It is a good idea to have them checked annually to see whether they are still up to date.
Drawing up general terms and conditions can be done in several manners. You can simply do it yourself, or you can base yourself on various models. In any case, ensure that the terms and conditions that you draw up suit your business. Also make sure that they are clear to any readers. Read more about drawing up general terms and conditions.
Filing general terms and conditions
You can file your general terms and conditions with KVK or the court. Although this is not an obligation, it can prove to be useful. This means that they are easily retrievable and have a stronger evidentiary function, while it also creates a professional impression.