IACCM Contract Management Forum

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2019-09-06 18:56:36

Difference between Terms and Conditions

 •  IACCM  •   2019-09-06 23:23:45
Terms are basically things that we agree to do or not to do. For example, a Tenant agrees to pay money for rent, while the Landlord agrees to let the Tenant occupy the property in return. Or a software company will let you use their software for a predetermined amount of time.

Conditions are items that must be satisfied before the transaction becomes binding upon the seller and the buyer. Or after signing/award, the conditions can be items for dissolution of the agreement.

For example, some buyers insert a condition for due diligence that allows the buyer to verify all important details before committing to purchase.

Or if you fail to deliver on or stick to what was agreed, the conditions can spell out how the contract will be terminated.
 •   2019-09-10 13:03:51
Thank you, Mark for explaining it with examples.
 •  Legal and Commercial Training Limited  •   2019-10-25 07:28:18
The words "Terms and Conditions" are likely to mean nothing more than 'the provisions of the contract'.

However, if the word "condition" is used in the contract, then it could mean that the particular provision is a 'condition' (in the legally technical sense) in that the term is fundamental to the contract. If such a 'condition' is breached, then the innocent party may terminate the contract. A term of a contract may be a 'warranty'. This is a less important term, breach of which will enable the innocent party to claim damages.

The aim that we should be seeking to obtain with contracts is to be as clear as possible and not to rely on a court deciding that you have used 'condition' or 'warranty' in a technical sense.

For example, if the date of delivery is vitally important, you could state that it is a condition but it is better to state that time of delivery is "of the essence". This phrase will mean that the term is indeed a 'condition' enabling the innocent party to walk away and claim damages and obtain the goods elsewhere. If you are agreeing to deliver the goods, you should state the opposite, namely that time of delivery is not of the essence. If you do not and if you are one day late, the other side can walk away. Or you could state that time of delivery is an estimate and that you will use all reasonable endeavours to deliver the goods by that date.

The above is the position in English law.
 •  Legal and Commercial Training Limited  •   2019-10-25 07:33:08
I would add that Mark is not incorrect in his description of a condition. He is referring to yet another meaning given to 'condition'. Mark is describing a 'condition precedent' which is, as he states, a condition that has to be satisfied prior to the rest of the contract becoming effective. To add some complication, there is also a 'condition subsequent'. This means that the contract is enforceable but will cease to be so if a condition occurs.

Rather than rely on the difference meanings, we should remember that a court will interpret a contract by asking itself what the parties meant when they used the words in the contract. A court will strive to give those words their usual meaning. So, rather than rely on a suspected legal meaning of a word, you could use clear and usual language to state what the deal is and what the contract means.
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