The importance of general conditions of contract

Imagine that you have to prepare a contract to regulate the provision of services to a client. You need to consider the scope of the services you will offer, the time required for their execution, and all the concepts and tasks that are excluded from the agreed price. However, the contract must also regulate many other aspects that will govern your commercial relationship, such as billing and payment methods, the confidentiality regime of the information you exchange during your relationship, or the processing of personal data that may be required for the provision of services.

Quantify the time dedicated to this task.

And now that you know how much time you have invested in preparing this contract, imagine having to do the same for each of your clients. If you do not have (or do not want) to dedicate all this time and resources to this task, the general conditions of contract are what your company needs.

What are general conditions of contract?

General conditions of contract are basically a set of predefined clauses that a company establishes to regulate all its commercial transactions. These clauses cover aspects such as prices, payment methods, delivery times, warranties, and liabilities, among others. Essentially, they are the terms and conditions under which a company offers its products and services to its customers.

Why are general conditions of contract crucial for companies?

The establishment and application of general conditions of contract benefit companies in many aspects. Their use is essential as it allows them to save time and resources, increases clarity and transparency towards their customers and, at the same time, protects them by shielding the responsibilities and warranties assumed. The main advantages of general conditions are as follows:

• Efficiency and quickness: By having a set of already established conditions, companies do not need to draft a new contract for each transaction, which speeds up the contracting process and, consequently, saves time and resources. The company is able to operate more efficiently by simplifying and speeding up this process. Likewise, the establishment of these conditions provides consistency to the transactions, ensuring that all of them are carried out under the same terms, thus avoiding confusion and misunderstandings. These aspects are particularly useful for companies that handle a large volume of operations.
• Clarity and transparency: Applying general conditions of contract is equivalent to establishing a clear framework in which the rules of the game are defined from the start. They provide clear information to customers, who know exactly under what conditions they are contracting. This increases the transparency and the customer’s trust in the company, which is fundamental to building lasting commercial relationships. This clarity translates into a reduction of misunderstandings and conflicts that can lead to legal disputes since, from the beginning, the conditions are clearly specified.
• Protection for the company: General conditions can include clauses aimed at mitigating legal and financial risks for companies. For example, they can limit the company’s liability in case of problems with the product or service, or standardize the guarantees the company offers in this regard, protecting against excessive claims.

Are there risks to consider?

The main risk of general conditions of contract arises from their formulation and drafting. Occasionally, general conditions may be too favorable to the company and unbalanced compared to the rights of the consumer or client. Therefore, it is important to draft them in a balanced and fair manner for both parties. Other risks to consider are as follows:

• Rigidity: General conditions, by their own idiosyncrasy, are standard and do not always adapt to the specific needs of each client, which can result in a less personalized experience. This lack of flexibility can lead to certain clients feeling frustrated if the conditions make it difficult for them or do not allow them to negotiate specific terms.
• Negative perception: Some clients may see general conditions as an attempt by the company to impose its terms without possibility of discussion. This impression of imposition can affect the commercial relationship. Additionally, if the conditions are too long or technical, and difficult for the average customer to understand, this complexity could generate distrust.
• Legal problems: General conditions must comply with current legislation. If they are not well drafted or do not comply with the regulations, they can be declared null and void, and this would clearly be detrimental to the company. Compliance with regulations and the risk of abuse outlined above should not be overlooked, as these are aspects that can lead to legal sanctions and damage the company’s reputation.

Conclusion

In summary, general conditions of contract are a vital tool for companies. They help establish clear and consistent terms for all transactions, protect the interests of the company by mitigating legal and financial risks, and promote trust and transparency with customers. However, it is important that companies balance these conditions to ensure they are fair and understandable, thus avoiding potential issues and contributing to improving the customer experience.

At MES Advocats, we offer comprehensive advice on contracting matters, assessing risks and designing general conditions in such a way that they adapt to the specific needs of each company. If you need more information or are interested in obtaining a quote, you can contact our commercial law area at this link.

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