What standard contracts and terms and conditions are
Almost every business uses standard contracts, meaning the same template, with small changes, for many customers or suppliers. When the clauses are drafted in advance to be used in many contracts and are imposed by one of the parties, they are general terms and conditions (condiciones generales de la contratación) and are governed by Ley 7/1998, de Condiciones Generales de la Contratación (the Spanish General Terms and Conditions Act).
There is nothing wrong with using them. It is normal, and even desirable, given how fast business moves: you cannot negotiate every term with every customer. But to be valid they must meet a set of requirements laid down by the law and the courts. If they do not, they may not apply or may even be declared void and treated as if they had never been written.
Requirements for your terms and conditions to be valid
- Prior knowledge. Your customer must be able to read them before entering into the contract, and the contract must refer to them. If you do not give them to the customer or the customer does not accept them, they do not form part of the contract.
- Clarity. The wording must be transparent, specific and simple. Clauses that are illegible, ambiguous, obscure or incomprehensible are not incorporated.
- Interpreted against you. If a clause can be read in more than one way, it is interpreted in favour of the party who did not draft it, which is your customer.
- Compliance with the law. Terms that contradict mandatory rules, meaning rules that cannot be changed by agreement, are void.
These rules apply whether your customer is another business or a consumer.
When your customer is a consumer, the bar is higher
If you sell to private individuals, the consolidated text of the Ley General para la Defensa de los Consumidores y Usuarios (the Spanish Consumer Protection Act) comes into play. This law prohibits unfair terms (cláusulas abusivas): those that have not been individually negotiated and, contrary to good faith, create a significant imbalance to the consumer’s detriment. For example, terms that limit your liability without good reason, impose disproportionate penalties or reserve to you the right to interpret the contract.
An unfair term is void and treated as never written. On top of that, simply including it can lead to fines from the consumer authorities, which in Andalucía are the responsibility of the Junta de Andalucía (the regional government). So when you deal with private individuals, reviewing your templates is not a luxury. I explain this in more detail on the page on consumer contracts.
There are limits between businesses too
When you contract with another business or a professional, there is more freedom to agree terms. Even so, some rules cannot be avoided. A clear example is Ley 3/2004, de lucha contra la morosidad (the Spanish Late Payment Act): it sets a maximum period for paying invoices between businesses and declares void any terms that are unfair to the creditor, such as those that extend that period or exclude late payment interest. If you are the one getting paid, you should know it; if you are the one paying, so should you.
I draft your standard contracts to suit your business’s needs, in line with the law, and review them regularly to adapt them to changes. That way you reduce the risk of fines and of complaints from your customers. You can hire this separately or as part of the comprehensive legal advice service.