A frequent question posed by the many folks I meet at industry events is how to approach the fine print Terms and Conditions
we often see in proposals and rental agreements. Sometimes the query is generated because a customer took advantage of a supplier. But more and more folks ask because they want to get rid of all the boilerplate fine print that adds pages to a proposal, agreement, or rental contract. And for the most part I agree with them.
Before I explain the how's and why's of my position, let me clarify the exceptions:
1. Companies that rent out equipment to end users - ie: the equipment leaves the owner's control and is transferred to the renter's control - need a signed T&C agreement that states the customer is responsible for replacement value, late charges, and damages. InfoComm, American Rental Association, and other trade groups have plenty of sample documents that can meet this need. It wouldn't hurt to have a lawyer look at them, but my lawyer said I should say that.
2. Integrators need strong terms and conditions agreements to back up their scope pf work. However, the complete language does not need to accompany the initial proposal. To see why, read on.
Now that's out of the way let me say this: anything you put in your proposal can and will be used against you. Whether you sell integration, digital signage, or rental & staging - a lot of legalese lays the groundwork for mistrust and encourages comparisons. In addition, if it looks legal, then your customer may feel compelled to have others (perhaps the legal department) take a look. All of this slows down the closing process.
The whole reason for terms and conditions is to clarify expectations, not to make it harder to come to terms. A proposal is a tool for securing the business. Too often a wordy T&C distracts the customer from seeing themselves in your proposal. Besides, who actually reads the fine print (picky, detailed people that will use it against you)? A page full of confusing words makes an impression without being read, but is that the one you were hoping for?
The solution has three parts. First, define Terms apart from Conditions. In my opinion, terms are a negotiable proposal item that can be used to propel the customer towards confirmation or closing. The most favorable pricing goes to the customer who confirms the earliest and pays the most up front. Conditions are things that should be hinted at in the proposal stage, but firmly rooted in best practices and industry standards.
Second, move the establishment of detailed
T&C (if necessary) to the closing process. Study this "conditions" phrase that could be used in an initial proposal:
"[Your Company Name] applies industry-standard practices to...[insert policy name here]. A detailed policy is available upon request or project confirmation." (you could apply this to overtime, change orders, cancellation, etc..)
In effect you indicate that there are rules, that yours are no worse than anyone else's, and that the customer's time is too valuable to waste on reading yet ANOTHER company's version of T&C. Once the customer has accepted your scope of work and basic terms, then it's time to present the full boilerplate (and in plain language) T&C page in the signed agreement.
Third, write a better scope of work and mention services that reduce the need for conditions. For instance, a clause that simply says your Project Manager will verify all change orders in writing would eliminate the need for about four paragraphs of some boilerplate T&C I have read.
You can't leave all T&C out of the initial proposal. The most common mistake I find is not having an expiration date on the proposal. And you may have noticed that I think payment terms are an important closing tool. I like to present the pricing from highest to lowest. For instance, if the client confirms by the proposal expiration date then the price is $1000. If they accept two weeks earlier the price is $950. If they accept early and pay 100% up front the price is $900. Too often I see the sales process starting with the $900 price tag and then forgiving the caveats that should have earned the customer that special price.
T&C is an important business tool that defines the rules of engagement, but it should not be a deterrent to doing business with you. By writing Terms that lead to closing and outlining Conditions that will be formalized later - the proposal can once again focus on winning the business.
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