Designed from the Supplier’s point of view, these standard terms and conditions are intended as a template for any supplier or contractor who is engaged in the business of supplying and installing equipment, especially when the works are to be carried out on premises of the Client.
These terms and conditions are intended to be used with a Quotation submitted by the Supplier to a Client and a form of Quotation is included.
The Quotation needs to be completed by the Supplier, and the Terms & Conditions plus other relevant documents – a Specification, probably with a detailed list of the equipment to be installed, Drawings, Contract Price breakdown etc – sent to the Client. Two signed copies of the Quotation should be sent and the contract will only be formed when one of them is returned to the Supplier, signed by the Client. If the Client wants to change anything, it may be necessary to have another Quotation signed incorporating the changes.
To avoid later disputes it is advisable for both parties to be very clear as to the detailed scope of the services, the equipment to be installed and the price – vagueness in the Specification is more likely to result in disputes than clarity.
Turning to the specific clauses in the Terms & Conditions:
As indicated above, this refers to the Supplier's Quotation and contains some other relevant definitions.
2. CONTRACT FORMATION
This is intended to make it clear that the Supplier's terms and conditions override those of the Client. In practice, this can be more difficult than it appears and legal advice should be obtained.
3. GENERAL OBLIGATIONS OF SUPPLIER
This clause details basic obligations on the part of the Supplier to exercise reasonable skill and care.
4. GENERAL OBLIGATIONS OF CLIENT
The Client is responsible for giving the Supplier access to the site when he needs it and for providing facilities such as secure storage for equipment, power supply etc. Responsibility for getting planning consents is with the Client.
This is designed to ensure that if a Client asks for a change, the Supplier will be paid for it at an appropriate rate. Also, a variation can result in a change to the contract period.
6. CONTRACT PRICE & PAYMENT
This refers back to the Quotation to a large extent but, in case the Quotation does not cover everything, there is provision for monthly payment. Also the Supplier has the right to give notice to suspend the work for non-payment (this is a statutory right for construction contracts in the UK) as well as the right to claim interest on late payment. The wording is designed to comply with UK legislation concerning payment terms in contracts that are ‘construction operations’ for the purpose of the legislation. Many contracts for equipment supply will fall into this category, especially if they are related to a building project in some way.
The statutory interest entitlement works out at 8% above base rate. Costs can also be claimed under the Act referred to in this clause. For more information there is a helpful website at www.payontime.co.uk.
7. PROPERTY AND RISK
Ownership of all equipment is retained by the Supplier until everything has been paid for but risk of loss or damage passes to the Client when equipment is delivered to the site.
8. INSURANCE & LIABILITY
This will need to be tailored to the particular circumstances but under our clause the Client is responsible for insuring the equipment and services and the Supplier has to maintain public liability and employers liability insurance.
9. DURATION, HANDOVER & DEFECTS LIABILITY
This refers to the planned commencement and completion dates and allows for the Supplier to get an extension of time if he is delayed by reasons beyond his control.
The Supplier has responsibility for remedying defects for 6 months following completion and the Supplier (in effect) fixes the date for handover of the works.
This clause makes it clear that the Supplier's liability is limited to remedying defects during the 6 months defects liability period and the clause aims to exclude any other liability of the Supplier to the Client. Legal advice is recommended here as the wording of limitation clauses may need to be adjusted to take account of particular circumstances and there is also legislation designed to protect consumers against unfair terms.
It is quite common for a contract to contain a clause whereby the Supplier becomes liable for liquidated damages – i.e. a fixed daily or weekly amount – if he is late in completing the works. No such clause is included here. In some ways a liquidated damages clause can benefit a Supplier as the amount of liquidated damages in the contract may be less than the actual loss which the client can suffer as a result of delay.
This gives each party the right to terminate the contract if the other party commits a material breach, and either party can terminate if the other becomes bankrupt.
11. INTELLECTUAL PROPERTY
Designs of the Supplier are owned by him and the Client has limited rights to use them.
12. FORCE MAJEURE
Unforeseeable events such as flood and fire are covered by this clause.
This clause contains a three stage method of resolving disputes – first, direct negotiation, second a reference to adjudication and, thirdly, the courts. There is information on adjudication in the Free Information section of our website.
This contains a number of provisions concerning notices, assignment, etc. For more detail on some of these subjects, see Free Information on our website.