Debt Collection - Terms and Conditions

The contract for the supply of products or services may be a simple agreement to open a credit trading account. The terms and conditions of the contract are the "legs" which will give it the ability to stand up in court, should that ever be necessary. 

The account application comes first. It profiles the prospective customer and the likely risk. It identifies the parties, customer and supplier and expresses their legal identities. It should also require references, and these should be checked. The account application should also ask for a grant of security interest.

A personal guarantee is now desirable in nearly all cases and should be a separate document signed by a responsible person such as a director or major shareholder of the account applicant.

The terms and conditions then specifically govern various areas of the supply, delivery and payment for the goods and services. Terms and conditions contemplate the possibility of non-payment and put in place a clause that has the debtor agree to bearing the costs of account administration, collection and/or the imposition of interest for delayed payment.

Only the potential customer who is already contemplating breaking the terms of an agreement will ever have difficulty signing up to these conditions. A prospective customer who fully intends to pay is usually willing to sign anything.