As you would be aware, many Not for Profit organisations are focused on ensuring they are sustainable into the future. Sustainability is a very broad topic and embraces a wide range of business characteristics ranging from structure, strategy, financial position, market access, marketing and effective governance. An overarching issue being experienced by many organisations is structural change within their sector, which in turn has increased the potential for commercial organisations to provide services in what was once seen as traditional Not for Profit service provision areas.
As a result, NFP organisations need to act more commercially and ensure that in doing so they are not being exposed to greater risks. NFP organisations are re-designing their business processes to be part of this competitive environment.
For many NFP organisations it may be that a stronger commercial approach to the rules associated with business transactions may be necessary. One aspect of this is to consider the completeness and quality of specific rules often referred to as the “Terms and Conditions of Trade” or T&Cs.
From a number of discussions with NFP organisations, there appears to be a gap between clearly stated T&Cs for the purchase or sale of goods and services, and what is actually being provided as T&Cs. Without clear rules, there could be unnecessary demands, arguments or even litigation occurring to resolve the operating relationships between a NFP organisation and its trading partner/s.
Therefore, it is important for NFP organisations to consider whether they have (or need) clearly stated T&Cs. Some of the topics that should be considered within the T&Cs include:
- Defining what is meant by supplies or goods or services being provided.
- Providing statements about the relationship between the T&Cs and the Competition and Consumer Act and Fair Trading Acts.
- Understanding and applying where appropriate the Personal Property Securities Act 2009 and the Personal Property Securities Register.
- Describing what is meant by a request for supplies, acceptance of supplies and contract for supplies.
- Describing what is meant by accuracy of information, describing what are supplies and what happens when what is supplied is not as described, or a decision is made based on incomplete information.
- What advice is required if there are any changes in ownership or corporate details, so not to incur any loss to any party involved in the trade.
- How the price is established, how a quote is accepted, and their respective impacts on the agreed price for the supplies.
- Application of GST.
- Terms of payment – what are the acceptable methods of payment and whether any terms of payment can be negotiated?
- How the supplies will be delivered and what happens if there is late delivery or loss and/or damage in transit.
- Who takes responsibility and when, for risk and damage.
- What are rules are associated with charging interest on outstanding monies.When does title of ownership over the supplies transfer, to complete the trade.
- What occurs if there are defects in what was supplied?
- Statements about the level of endeavour required to supply services and the quality of those services.
- What happens if there are errors and/or omissions that impact on refunds?
- What warranty is provided?
- What is being regarded as exclusions?
- What is described as a limitation of liability?
- Who owns the Intellectual Property?
- What happens if there is a default in payment and the consequences of such default?
- What are the different forms of cancellation and the consequences of cancellation?
This is not a complete list but provides a basis for each NFP organisation to review existing T&Cs or establish T&Cs that ensure all future trading activities are based on clearly established rules.
CBB’s consulting team has been working with organisations on strategic projects for almost three decades. If your organisation needs assistance with reviewing, rewriting or creating a constitution, get in touch with Wayne via:
Phone: 1300 284 364