There are 2 reasons why your "T&Cs" may need a re-look as an IT Service Provider.

A lot of people I know in the IT Sector, such as Software Development Agency, want quick contract execution.

And because of that, they tend to use "General Terms of Conditions" for project execution.

Now here's the issue:

It may seem that once the client signs the document, it becomes valid and enforceable, but there's a catch.

The main reason why a Contract gets signed is to:

1) Avoid a dispute

2) Fix a dispute

So the real challenge arises when a dispute occurs, and the parties find themselves in court.

The Case At Hand

Often, the courts CAN strike down agreed-upon terms and provide their own interpretation, as happened in a recent case.

In this case, an IT Service Provider engaged in a B2B contract with a client involved in financing and acquiring stockholdings in various companies.

A dispute arose, leading the client to terminate the contract.

The points of dispute were as follows:

1) The contract allowed the client to dispute the IT provider's invoices within a 30-day deadline through registered mail.

2) A penalty clause outlined the payment of a Lump Sum Termination Fee if the client terminated the agreement early without the vendor's fault.

While these provisions may seem standard, the court struck them down using the "unusual terms" test.

The court reasoned that a general acceptance of contract terms does not cover unusual terms.

Unless specifically brought to the attention of the weaker or less experienced party.

As per the court, the drafter of the contract (the IT Provider) must assume that an inexperienced contracting partner (the client) may not understand unexpected or atypical clauses.

What might be customary in one industry could be perceived as unusual by a party unfamiliar with that industry.

In simpler terms, the court held that these clauses should have been better communicated to the client.

And informed consent was necessary to make them enforceable.

Key Takeaway:

These small details are often overlooked.

The invoice-dispute processes and contractual penalties are common in commercial agreements.

But this case highlights the importance of clear, unequivocal drafting and effective communication.

If the clause had been clearly presented, perhaps in bold or capital fonts, the client's attention would have been sufficiently drawn.

This would have made the clause binding and enforceable.

That's it.

This is why staying clear in Contracts is important.

You might also be in a situation where you're using a document that won't even stand in a court of law.

So what's the point of using such a Document if it doesn't do its intended purpose?

P.S. Have you ever gotten into a dispute over invoices and payments?

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