[EP 005] Trademarks 101: The Basics

Trademark registrations are one of the easiest and cheapest ways to protect a business. Today we delve into the basics of this area of trademarks:

 
  • Why trademarks are important
  • What trademarks are
  • Who trademarks are relevant for
  • The most vulnerable time for a business
  • How you get trademark protection
  • Issues for businesses that don’t get trademark protection 
  • What action you can take now
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LINKS 

CLICK HERE to download a copy of the Trademarks Process.

EPISODE HIGHLIGHTS

1:28 Why the need to talk about trademarks?

2:28 Risks that trademarks are helping to protect

2:42 Risk number 1 - Someone has used a mark longer than you

3:50 Common resorts when you fall into Risk number 1

4:50 Risk number 2 – Traders using a similar mark

5:21 Back to the basics – What are trademarks?

6:09 Two different types of trademarks

7:07 How to get trademark protection in Australia

8:18 What happens if you don’t get protection?

10:54 The most vulnerable time for businesses to miss out on a trademark

12:21 The benefits of trademark registration

13:02 The cheapest insurance for businesses

13:15 Action steps

FULL TRANSCRIPT

Hi all, welcome back to Talking Law. Today, we’re going to talk about the thorny area of trademarks.

Today we're going to be talking about the basics of trademarks. We’re going to be talking about:

  • Why trademarks are important;
  • What trademarks are;
  • Who it’s relevant for;
  • How you get protection, and
  • What if you don't get protection?

In future episodes, we'll be talking about trademarks in a bit more detail. In the future episodes we'll be getting into the nitty-gritty of the application process for people who are interested in those aspects and then in other episodes we’ll be talking about trademarks and the relevance of trademarks for International expansion.

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We’ll be talking about commercialisation of trademarks - so essentially that means making money from your brand - and other more advanced components of trademarks and brand protection.

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Why the Need to Talk About Trademarks?

But today, it’s all about the basics. Let’s kick it off with why we’re talking about trademarks today?

We’re talking about trademarks because trademarks are an area of real and tangible risks for organisations. It’s an area where you can get a big return on your spend, and it’s one of those areas where finding a solution once a problem has emerged is a lot more expensive for business owners than it is if the intellectual property - your brand - is protected early on in the lifecycle of the business and in the use of the brand name.

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It’s one of those areas where I really think it’s important for businesses to be aware of first before problems occur and it’s really important for you to be aware of before you’re going to make big decisions in relation to your business that might include:

  • Expansion,
  • Delivering new product lines that have a strong emphasis on the brand that’s connected to them, or
  • Looking at dealing internationally, for example, expanding internationally.

Why every business should be concerned about trademarks

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Risks that Trademarks Are Helping to Protect

So, what are the risks that trademarks are helping to protect?

We’re going to do a quick overview of this first just so that you understand the risks that we’re trying to protect here and then we’ll get into a bit more detail about what trademarks are, etc.

 
· Risk 1: Someone has used a mark longer than you

Ok, so the first risk is that you’ve used the mark for a while in your business and then suddenly find out that someone else has used that mark longer than you. They’ve used a name like your business or company name, or brand name but they’ve used it in the market longer than you and you had not realised.

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Your risk here is that you’re exposed to an infringement action for the people who have the better right to your mark than you do. It’s important to understand here that damages aren’t just the usual sorts of damage which might be the loss of profit for the person who has the mark, but can also be something that’s called unaccounted profits. Essentially that means the profits that you have received while using the mark.

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So we’re talking here about worst case scenario if someone sues you. But, it’s important that you bear in mind this risk as you’re moving forward because whilst it’s less likely that someone will take you to court, it’s certainly highly likely if someone has a better right to a mark than you do and they discover you, you’ll be going to receive a cease and desist letter that essentially says that you need to stop using that mark.

And the issues for business owners who are thrust into that sort of situation is they then have to make this critical decision about:

  • Whether or not they completely re-brand their business;
  • Whether or not they try to enter into some sort of settlement deal with the person that’s threatening to take them to court, or
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  • What are the actions they might need to take at that point.

And we’ve certainly seen many instances of businesses who’ve had to consider these sorts of issues, not just in the first years of their business but when they’re ten, fifteen, twenty years into their business, and as I talk about later on in this episode, we’ve even seen an example of someone who’s forty years into the business, who’s been made to think about some of the issues that relate to trademarks simply because they haven’t gotten in full trademark registration first before their competitors.

 

So trademarks can be a good defence or protection against this sort of risk of someone else accusing you of using their mark.

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· Risk 2: Someone using a mark that’s too similar to your mark

The other risk that trademark registrations help you to protect against is the risk of other traders using a mark that’s too similar to your mark.

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Now, trademarks are a first-in, best-dressed type of situation. It’s really hard to get a trademark off someone once they’ve already gotten it. It’s just really important for you to realise that if you’ve got a brand that’s important to you, you need to get in and register it before someone else registers that mark.

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Back to the Basics

So, let’s first then go back to basics. What are trademarks?

Most business owners just don’t understand this area. They don’t understand the risk and they don’t understand how they can protect themselves. So, that’s what I want to bring to you today and I’m also talking about it so I can bust a few myths that I see out there that annoy me a bit.

Okay, so what are trademarks? Let’s just start right at the beginning.

A trademark is a mark that’s used to distinguish a business or product from those of their competitors. That might be a word, it might be a business name or a company name or a product name, or it might be a logo.

 
 
 

It can even be a sound, a colour, or a scent. There’s lots of things that might form a trademark, but the most common ones are words and logos. You can have two different types of trademarks, you can have a common law trademark or a registered trademark.

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Common Law Trademark vs Registered Trademark

A common law trademark is a type of protection that you potentially get from using a mark but it can be very hard to establish, whereas a registered trademark is a national registration of that mark in a way that is searchable publicly.

 

So, who are trademark registration’s applicable to? They are particularly applicable to any business or person where brand is important either now or in the future; even if brand isn’t important, or isn’t going to be important it’s still important to understand this area so that you understand the risks of potentially infringing someone else’s trademark or other intellectual property.

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Equally, it’s important to have a hold on this area when you’re growing, or if you’re planning on future growth in your businesss, and it’s particularly applicable if you’re ever planning to sell your business in the future.

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How to Apply for Trademark Protection

How do you get trademark protection?

Trademark protection in Australia is a national registration and it’s jurisdiction by jurisdiction, so you choose which jurisdiction’s you want to be protected in. In Australia, that will be Australia but if you serve international clients or customer bases, then other jurisdictions may be relevant to you as well.that will be Australia but if you serve international clients or customer bases, then other jurisdictions may be relevant to you as well.

 

It’s really important to remember that business and company name registration is absolutely not the same as a trademark. This is a myth that I have heard time and time again. Just because you have a business name registration or a company name registration, this does not mean that you have protection or registration for the trademark as a whole. The trademark registration process in Australia happens in a completely different way to the business and the company name registration process. It’s a process that you have to apply for.

 
 
 

You can apply for it yourself or you can go through a professional. The application process takes a minimum of seven months, but it can sometimes take a lot longer if there’s problems in the application process.

Now, I want to talk about what if you don’t get protection? We’ve seen new cases each week in our business, of businesses that have caused themselves massive costs by one of usually two things: Either, firstly, not getting trademark registration done early enough, so leaving it too late and therefore creating problems for themselves because of other trademarks that have gotten in first, or, secondly, having a weak trademark registration.

 

As I talked about before, there’s lots of elements that you need to think about when you register a trademark and those can include (trying not to repeat myself) but the classes that you choose to register in, or the wording that you’re using as protection for your mark.

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Now, we see many weak trademark registrations which essentially means that although you have a trademark registration you may not be able to use it in the way that you intended. I think the important thing for businesses to understand with the whole trademark registration area is that not all trademarks are created equally, and so it’s really important not just to get the protection in as quickly as possible but to also make sure you’ve got the right protection so it’s actually providing you with the protection that you need in the future when you need it.

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I’ve got loads of horror stories that I could talk about with trademark registration, or businesses that have failed to get a trademark registration. One that comes to mind as an example of one of those things that really stuck in my mind all these years was one client we had that had had the business for more than forty years before they realised that someone in the very recent past had registered a name very similar to theirs for the exact same type of goods that they sold, which meant that they were not able to get that an example of one of those things that really stuck in my mind all these years was one client we had that had had the business for more than forty years before they realised that someone in the very recent past had registered a name very similar to theirs for the exact same type of goods that they sold, which meant that they were not able to get that trademark registration back and effectively what that meant for their business was that:

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1. When they went to sell their business, the value of the business was massively eroded because there were now multiple traders out in the marketplace using a similar name;

2. It also meant that our client couldn’t stop those traders using the similar name unless they are willing to spend hundreds of thousands of dollars in a Federal Court action.

For them that was a massive issue in not getting on top of trademark registration early enough and as they said to me they just haven’t understood for all of this time, that being for forty years, that business name registration and company name registration was not the same thing as trademark registration, and I just thought it was so sad that such a simple mistake cost them so much in their business.

 

So, the most vulnerable time for businesses in relation to infringement actions and making mistakes in relation to trademark registration, is when businesses are setting up in the first instance, or picking a new name, or picking a new brand name, and issues that I see often are that they’ll pick a new name that can’t ever be protected or, secondly, they’ll pick a name that infringes someone else’s trademark rights. This is usually because, in this process of developing a new brand, they’re thinking through the naming process in isolation from the concept of trademarks in and of themselves. They fail to search to see whether or not names they’re coming up with might infringe other trademarks that are registered, or they’re just not thinking about how to come up with a name that is inherently protectable into the future.

 

Issues that I see in relation to established companies who haven’t got trademark registrations is obviously the example I gave you of the business that had, for forty years, forgotten about trademark registration. Other issues are of course competitors using similar marks to your business and you not being able to do anything about it because you haven’t got a trademark registration, or competitors using marks and Google Adwords or meta data or light registration causing problems.

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On the flip side, there’s a hell of a lot of benefits of trademark registration. So trademark registration means that:

  • It makes others less likely to copy your mark;
  • Secondly, it’s easier to stop them if they do copy it;
  • Thirdly, it provides important protection at the brand development phase and then through business life cycle;
  • It also helps to protect website traffic hijacking; and
  • You can also commercialise a trademark once it’s registered so it opens the door for licensing and other income streams;
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  • Trademark registration is also often important for various government grants.

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So, it can really be something that provides value for your business. Trademark registration can be very cheap if done early. In fact, I call it one of the cheapest insurance for businesses around, and finally, trademark registration can help to establish solid value if you ever want to sell the business.

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Action Steps

So, then what are the action steps for you to take away from today’s discussion?

  1. The first thing is that you should be thinking about trademark protection as early as possible.

o Firstly, you should be making sure that you aren’t infringing any other brands and secondly, you should ensure that you have a brand that’s capable of protection and finally, remember the first come, first served process of trademark registration in Australia. So, essentially act quickly because there can be big problems if the competitor gets in first!

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  1. The other thing to remember is that not all trademark registrations are the same. We see lots of issues with fully prepared trademark protections. At the end of the day trademarks are complex: protection is only as good as the quality of the registration and unfortunately, you’ll only understand the quality of the trademark registration when you try to use it, which is often too late in the process so just make sure you’re getting the right protection at the right time when you’re applying for your trademark.trademark registration when you try to use it, which is often too late in the process so just make sure you’re getting the right protection at the right time when you’re applying for your trademark.unfortunately, you’ll only understand the quality of the trademark registration when you try to use it, which is often too late in the process so just make sure you’re getting the right protection at the right time when you’re applying for your trademark.understand the quality of the trademark registration when you try to use it, which is often too late in the process so just make sure you’re getting the right protection at the right time when you’re applying for your trademark.
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Alright, so what are the action steps that you can take now to protect your brand or to work out if your brand is protected or needs to be protected?

We’ve got two downloads that you can grab from our show notes. Our show notes are over at talkinglaw.com.au and you’ll find it under this podcast episode which is ‘Trademarks: The Basics.’ Then we have a cheat sheet which is a simple diagram of the trademark process which talks you through the whole trademark process, if you’re interested in seeing how the process works, and then the second download is a guideline on how to work out if your trademark is able to be protected.

 

So what are the action steps for you?

  • Firstly, work out what brands in your business are important now, or may be in the future so that’s our first: a brand check for you.
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  • Number two, check if you have protected these brands, and when I talk about brands I might be talking about your company names, your business names and any particular product or service lines that you’re operating under a brand name.
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  • Number three, if these brand aren’t protected do a quick assessment for yourself to see if they’re capable of protection and you can do that using the guideline that I said you can download from the show notes.
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  • And fourthly, protect them, protect them through registration in jurisdictions that are relevant to you.

Quick Recap

Okay, great! So quick recap today, what did we talk about:

  • We talked about why trademarks are important;
  • What trademarks are;
  • Who it’s relevant for and when the most vulnerable phase of the business is in relation to trademark protection and expulsion;
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  • How you get protection, and what if you don’t; and
  • We gave those action steps and the cheat sheets and guidelines that you can download from the show notes at talkinglaw.com.au.
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If you would like more information about this topic you can also get more information through our website at ‘Talking Law’ or at www.aspectlegal.com.au. Through that website you’ll also be able to download a transcript of this podcast episode if you’d like to read it in more detail, and you’ll also find details of how to contact our lawyers at aspect legal if you would like to have any sort of assistance with your trademark registration, if you’ve got issues with competitors that are using a similar name to yours and you want to do something about it, or if you’ve just got some questions that you’d like to run past our lawyers. Finally, if you enjoyed what you heard today, please pop over to iTunes and leave us a review. We will be most grateful. Thanks again for listening in. See you next time, bye!

 

One common legal issue businesses face are problems that crop up from time to time with clients. This can lead to clients paying slowly, or not at all, costly and time consuming disputes, and brand damage. In this episode we discuss how having the right approach from the start can help you to avoid most of these problems.

Links

Episode Highlights

1:40 Five customer engagement issues you need to look into

5:11 Setting up the right terms and conditions

6:00 What should you include in your terms and conditions

6:38 Clarity on responsibility of both parties

7:49 Clarify who owns the intellectual property

9:06 Payment terms – incentives and penalties

9:57 Liability clauses you need to include

13:50 Writing your terms and conditions in plain English

14:55 Fulfill your own terms – and be proactive

16:24 Consider the cost of inaction

17:31 Four action steps you need to take

Full Transcript

Today we’re talking about the ways that you can set up your client relationships right from the start.

So, why is this important? One common legal issue that businesses face, are problems that crop up from time to time with clients or customers, depending on which language you use.

That might reflect itself in:

  • Clients being slow payers;
  • Clients not paying at all;
  • Clients that raise issues with the goods or services you’ve provided;
  • Clients that try to terminate contracts with you before they’ve come to an end; or, at the worst,
  • Situations where clients try to make you liable for the loss they have suffered, that potentially could even be greater than the value of the goods or services that you’ve provided to them.

The most common of all of these that I see are payment related issues and disputes about the goods or services that have been provided. Although, I have to note that when disputes occur, they often directly link also to slow non-payment as well because when customers aren’t happy they generally stop paying, so all of these problems can be interlinked.

In most cases these sorts of issues essentially come down to a failure in the process of the original engagement with the customer and the systems you set up right from the start to support them and deal with any issues as they occur. For example, generally I see these issues arising from one of these particular situations:

  1. Terms and conditions or terms of sale that have been used in the beginning that haven’t had the right clauses included or, they’ve had the clauses but they’ve been set up in a way that means that they don’t have the effect that they were meant to have;
  2. There were no Terms and Conditions right from the beginning of the relationship with the client;
  3. The Terms and Conditions were not read and understood by the client;
  4. There was a lack of communication in any engagement process and throughout the relationship, which then allowed issues to bubble up to the surface; or, finally
  5. There was a lack of systems established to monitor the relationship and deal with any issues as they occurred.

Today we’re going to talk about each of these five areas. Essentially, having terms and conditions in place to begin with that include the right clauses, communicated in a way that your customers understand; ensuring that your communications throughout the process of delivering the goods and services are clear, and that your systems support the rights and obligations that arise through your terms and conditions document.

What does that mean? Essentially, that you have systems in place to make sure that you are providing what you have said to your client that you will provide.  Now, if all of these things are ticked off, I think you’re fine and that you’re in a situation where it is extremely unlikely that you will have customer issues going forward.

An example of this having been done really well is a recent case that I worked on where we were able to get a $250,000 win for one of our clients, on the basis of really tight wording that we used in their contract initially and a good negotiation strategy in dealing with the contractor’s view.

That’s an example of where terms and conditions have really correctly and helpfully given you a basis that you can launch from if a dispute does occur in the future even though, if done well, you’re also highly reducing the likelihood of dispute. But, on the flip side, we’ve had many instances where businesses have signed up clients for lots of projects who have then pulled out half way through and refused to pay for the work done, or clients who have come in to see us who have lost tens of thousands, sometimes hundreds of thousands of dollars when their clients refused to pay, because an argument erupted during the period of the provision of the goods or services. All of those usually link back to some issue in one of those five areas that I mentioned a few minutes ago.

What processes should you have in place?

Today, we’re going to start discussing what processes you need to have in place to ward off issues from the start. I’ve also created an action guide for you as a checklist that you can use to guide you through all of these areas because we’re going to be talking about a lot today, obviously too much for you to take note of while you’re listening to a podcast.

So, to make it really easy, I’ve made a checklist available for you related to this episode at talkinglaw.com.au or you can access it via the website of my commercial legal practice at aspectlegal.com.au

Okay, so let’s launch into what you need to do to have the right terms and conditions in place.

The concept of having the right terms and conditions in place comes from, in essence, the concept that a contract is imperative.

  • A contract sets the relationships between parties;
  • It sets the expectations between the parties; and
  • It’s not a document that describes simply what you will and won’t provide but also what you expect of your clients.

When done well, it helps to ward off arguments with clients because, essentially, arguments only occur when both parties think they’re right.

Thatmeans arguments can only occur when something hasn’t been clear, so our task is ensuring that we have documents that make all of these areas really clear that help to protect you from open liability and that helps you to set up the right expectations from the start.

Okay, so what should you be including in these documents? I’ll go through a bit of a checklist of the sorts of things that you should be considering including, but obviously I need to add a caveat that each business is different so you need to ensure that your terms and conditions are a reflection of your business not a reflection of someone else’s.

This is why copying and pasting someone else’s terms and conditions doesn’t really work because they’re not your business they’re a different business. So if you have copied and pasted a set of terms and conditions it’s important that you go back and that you review them thoroughly in light of the things that I’m about to talk about now.

Alright, so what should you be including in these documents?

Clarity on What You’re Responsible for

Firstly, clarity about what you will do and what you’re responsible for. This is, essentially, the crux of the documents. This is something that you should sit down and think about and understand first before you even get started in working out whether or not your current terms are appropriate for you where you are now. Other areas that you need to think about clarity are on payment terms, which sounds obvious but it’s so often not dealt with clearly enough in the agreement and it’s super important. You need to be clear on what the client’s obligations are and what you need from – if you’re going to require anything from them – to be able to deliver your goods or services. These issues are really important and often forgotten. If you need something from them, you need to be clear about this in your terms.

If they’re providing things to you then you need to ensure that you get protection in relation to any information they give you.

For example, sometimes this might look like licenses in relation to your use of those things.  You need to be clear that intellectual property (I’m not going to go into this in too much detail, we’ll do it in some future episodes) but essentially intellectual property you need to think about a few different things.

Clarify who owns the intellectual property

Number one, if intellectual property ownership is important, you need to make it clear about who will own the intellectual property and, if intellectual property will pass over at some point, you need to be clear about when that will pass over.  For example, very simply, many documents just simply say intellectual property will pass to the client but that isn’t making clear that you won’t pass to the client until the client has actually made payment. So that’s an important thing to include.

Also, bear in mind that sometimes, intellectual property clauses need specific caveats. So, that means if you are providing services or goods to your client that are based on some things that you then use with other clients as well, you just need to make sure you’re clear about what you’re actually handing over in any intellectual property clauses.

You don’t want clauses that essentially say all intellectual property will pass to the client, because that’s not really reflective of what’s happening and it might restrain you from being able to use that base intellectual property with other clients moving on into the future. Or, maybe you don’t even own all of the intellectual property yourself, say for example, if you’re licensing images from someone else and you’re providing graphic design or web development services you need to make sure that you’re clear that that intellectual property is not something that you can ever pass over in intellectual property form.

The next area that you might want to consider building into terms and conditions documents are clauses that deal with slow payment.

You might, for example, want to include some sort of incentive for your clients not to want to be a late payer. For example, Interest. Even if you won’t be applying the interest, or administration fees, or whatever else you’re calling fees that you might threaten to apply to slow payers, at least if you have clauses that allow you to charge these figures, it gives you something that you can threaten to apply if you have slow payers. It gives you some carrot to encourage them to pay in a timely manner.

Slow payment is a whole different topic which I will deal with in another episode in the future, but for now it’s enough to say that it’s important that when you’re reviewing your terms and conditions, you have the appropriate clauses to deal with slow payment.

You also need to make sure you have the ability to on-charge your customers for any enforcement cost and you need to make sure you have the right protection against liability and that in this you don’t over shoot the mark. Quite often I see liability clauses that really aren’t appropriate for the situation that they’ve been used in and that really overshoot the mark. The problem with that is that there’s various legislation around that might create an issue or the situation in which that clause then becomes invalid and you, therefore, don’t have any protection from that liability clause at all.

So, it’s really important when you have liability clauses – and when I say liability, I mean clauses that might be under the heading of indemnities or waivers or release clauses or there might be exclusion of warranty or exclusion of liability clauses, anything with that sort of heading – you need to make sure you understand what those clauses actually mean and make sure that they are appropriate for the situation of your relationship with your client.

I often find that people look at these clauses and have no idea what they mean and then decide, therefore, just to ignore them. But, that’s completely the wrong approach because if you do that and the clauses are incorrect for your business, then you don’t want to be finding that out later when it’s too late.

So, it’s really important that you understand what each of these clauses mean in your business and that they are appropriate for your business.

And then finally, you should also be thinking about how it is that you link this document – being your standard terms and conditions document – together with the documents where you provide the specifics of what you’re providing your customer.

Quite often businesses would use separate documents like, for example, proposals or estimates or schedules, or a statement of works where they set out the details of what it is that they‘re going to be providing to the customer, that isn’t something that’s included in the general terms and conditions.

It’s really important that each of these documents are referred to correctly in the terms and conditions and that you work out how they are going to interact together, and that you’ve also worked out a framework for what needs to be included in these documents that are your proposals or estimates, to make sure you’ve covered off the detail that you need to, to link it up correctly with your terms and conditions.

Alright, and the list goes on but these are the major issues that you should be considering.

But it’s not enough to just have your terms and conditions document in place, you also need to make sure they’re up to date with current legislation – and that current legislation, I must say, is changing all the time, so you really need to have your agreement updated at least once a year to ensure that you’re on top of that changing legislation and on top of your changing business phase. Quite often your business will be in a completely different stage now than it was one year before or one year in the future, and therefore, your terms and conditions need to accurately reflect where your business currently is now and the way you interact with your clients now; not how you did in the past or how you’re going to do it in the future.

There’s no point having terms if they aren’t understood by you and if they aren’t understood by your clients.  I’m often surprised by how often people in the business don’t know or don’t understand what’s in their terms. It’s not just the owners and managers that need to understand agreements that regulate your relationship with your clients, but anyone who is part of the initial sale or who is client facing throughout the relationship.

So how do we do this? How do we create the situation where we have documents that are understood by you and understood by your clients? Because, let’s face it, I think the reality is, that many of us click away terms and conditions without ever reading them and I think that’s the reality that many of us have businesses or work in businesses where we deal with terms and conditions that we don’t even understand ourselves.

So where do we start with all of this?

Writing your terms and conditions in plain English

The first thing is we need to have our own client agreements that are written in plain English and that are easy to understand and that aren’t overly long or overly complicated, because the longer they are the less likely that any of the terms are going to be read or considered carefully by the very people that you want to communicate these to.

So, if we think about our agreements, essentially it’s a checklist for us. It’s a way for us to think about the important elements of our relationship with our clients, and that essentially means that we need these documents to be something that we understand and that they understand.

Another important thing to do then is also to review your terms and conditions and to work out what are the really important clauses to you and restate this to your clients in a really clear and succinct way in a separate communication to your client.

A nice way to do that, for example, might be to send out a welcome pack, or onboarding documents, or whatever you call them.

Firstly, as I said you need to understand the documents and then you need to make sure that your clients understand them as well.

Then, the next element to consider is whether or not you’re actually complying with the terms yourself, so you need to put the systems in place to make sure you can deliver your services or goods the way you’ve promise them.

You need to be rigorous about the standard of products and services you provide and the way in which you provide them, and this is particularly important as you grow because sometimes businesses grow quicker than the systems that are supporting them and the reality is that poor customer service  will cost you dearly in the long run. So, if you’re making promises that you’re not going to back up, then you’re going to be creating a difficult contractual situation for yourself, but you’re also going to be creating bad blood with your customers.

So, you need to jump on issues quickly. You need to communicate early and this means that you need to have systems in place that can identify the issues before they escalate.

And fourthly, make sure your clients don’t slip too far away from the obligations that they have under the contract.

This can be a slippery slope. Sometimes, it feels really hard to pull up clients if they are not complying with their end of the bargain, but it’s really important that you reign them in gently at first, but quickly because these sorts of things, as I said, can end up being a slippery slope. So you need to have systems in place that can help you to identify if your client’s aren’t complying with their obligations and you need to ensure that you deal with it as soon as you’ve identified these as an issue.

The cost of inaction

What if you’re busy and you don’t have time for thinking about your terms of sale and you think people don’t even read them anyway? The thing that I would say to you in this situation, which I completely understand – we’re all busy and, as I said before, certainly there’s the belief that people often don’t read the terms and conditions that you send to them.

I think it’s really important that you think about the cost of inaction. So think now about what it would cost you if even just a few clients decided that they didn’t pay. Obviously, this is far, far greater potential cost than the cost of actually sitting down and going through the process properly.

What if, on the other hand you get upfront payments or deposits to cover your initial costs so you figure slow payment isn’t relevant? Don’t think you’re immune in this situation. We see lots of instances of customers demanding money back which then puts a strain on the business. But, simple economics aside, remember that client’s that are unhappy can do a lot of harm to your brand, so the concept of proper client engagement is as much about building and protecting your brand it is about legal and financial protection.

Four Action Steps for You to Take

We’ve talked about what you can include in your terms and conditions, now let’s talk about the Action Steps that you should be following in relation to this whole process, once you’ve got your terms and conditions, to ensure that you’re implementing them in the correct way. And, remember, if you’d like a download of this guide that we’ve gone through today, head over to our show notes at talkinglaw.com.au and download the guide from there.

So, your action steps are four to keep it really simple:

  1. Firstly, as I said review your terms and conditions of sale.
    1. Do you have each of the elements that we’ve discussed above? That’s the first thing;
    2. Are they compliant with current legislation?
    3. Are they easy to read and understand?
    4. Do your customers actually sign them, or do they just a tick a box that you know they’ll never be able to read?
    5. Do you understand what’s in your terms and do your staff or to the other staff in your organization understand what’s in your terms?

So these are the first things to do in relation to your review of your terms and conditions of sale.

  1. Then the second action step, is to think about your process of on boarding. Once you’ve got your terms and conditions right – once you’re confident that they contain all of the right elements and once you’re confident that you have produced them in a way that your clients and your staff will understand them, then now think about on boarding of your clients.

If your clients receive your terms and conditions in a tick a box exercise, then I would suggest that you separately send your terms to your clients as part of the onboarding process to give them the opportunity to have a copy of the terms, so that they can have a read through them. Obviously, it won’t be so exciting for them to read through the terms and conditions if they’re long and boring, so this gets back to ensuring that your terms and conditions are easy to read in the first place. And then, in your process of on boarding, the other thing that I recommend is being clear about the items that are important. So, as I said before, restate them in a welcome pack. You can say things like this in a nice way but just make sure you’re communicating it clearly.

So we’ve talked about the action steps of reviewing your terms and conditions of sale and thinking about your process of on boarding. The third element in your action step here is to review your systems for complying with your terms.

System and compliance reviews

  • Do you measure how you are delivering your goods and services?
  • Do all of your client-facing staff understand the terms and conditions and your obligations and your client’s obligations?
  • Do you pick up your clients if they aren’t complying?
  • Are there review periods in these terms?

Think about all of these issues in relation to how you can build systems to ensure that you are complying with the terms.

And finally, and this is action step number four, have a process for ensuring that you jump on emerging problems quickly before they gather speed.

So that’s it. That’s all I have today to say about this episode so just a quick recap. In this episode we talked about:

  • Ways to set up your client relationships correctly right from the start. If you’d like more information about this topic, as I said, head over to our show notes at talkinglaw.com.au for your free download and through that website, you’ll also be able to get a transcript to this podcast episode if you’d like to hear or read each of these elements in more detail, and there you’ll also find details of how to contact our lawyers at Aspect Legal if you’d like help with any of the items we covered today.

We can certainly help guide you through what can be a bit of a complicated process if you’re trying to do it on your own.

And finally, if you enjoyed what you heard today, please head over to iTunes and leave us a review. We’d be very grateful and if you’d like us to talk about a particular topic, feel free to head over to our website and leave us a voice message with a particular question or issue that you would like covered.  We’d be more than happy to cover any of the questions that you have and certainly I’d really like this podcast episode to be all about what you want to hear about.

Ask me what you want to hear about commercial law and business law and I’ll try to cover it in the future.

Thanks for listening in to what can sometimes be a dry topic, but I really hope you’ve got some pointers to take away that will help you really super charge those client relationships and help you ward off problems before they occur.