Even though it appears to be common practice to put terms and conditions on the reverse of invoices in the hope that this makes them enforceable, this may not be the case.
When it comes to a creditors ability to pass on collection costs to a debtor disclosure is the key.
I say this because funny things can happen at the Disputes Tribunal. In a recent case the tribunal found that "While it is possible that a term may be considered to have been incorporated into a contract by a course of dealings between the contracting parties, the law requires that reasonable notice of the term is provided."
In further explanation regarding this case the tribunal stated that "While there is a reference to terms of trade on the bottom of the applicant’s invoice, I do not find that to be sufficient to allow the applicant to assert that the respondent had notice of these particular terms. The clauses about collection and other costs and disbursements (including solicitor-client costs) are buried in the small print on the back. There is no evidence of any warning (other than the small print on the back of the invoice) that these unpaid invoices would incur collection and other costs."
Unfortunately this lead the tribunal to find that "As a result of this, I do not find that the applicant has established that it is entitled to collection and other costs."
So what does this mean to you?
Firstly if you have continuing business with a debtor get a credit application signed. This is the most enforceable contract.
If a credit application is not feasible put the most important terms on the face of your invoices. We consider the most important to be the ability to charge collection costs, interest, and fees in the event of non-payment.
Romalpha type clauses need to be worded in a certain way to comply with the Personal Property Securities Act, and given the space restrictions on the face of invoices this cannot be done.
Thanks for revealing this super valuable resource!
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