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Dealing with Third Parties - Don't get Caught Out

Contracting with third parties can be a minefield if you are unsure where to look. You may find yourself being subject to the onerously one-sided terms of a supplier even before you are aware that a contract has been formed.

When contracting with third parties, it is important to agree contract terms with the other party before it's too late. There is no requirement in contract law for anything to be in writing before a valid contract exists and agreeing terms pre-contract is important. In entering into a contract on unfavourable or unknown terms, the school will have missed its opportunity to furnish itself with any remedies or assurances beyond the statutory starting points, such as how and when the goods or services will be delivered.

One way of avoiding a scenario where you have contracted on uncertain or unfavourable terms, is to use standard, but flexible, terms and conditions and to insist, where appropriate, that the school only does business on those terms. Separate terms should be used when purchasing goods, services, and goods and services as the things to look out for - such as the terms implied by law - are different in each case. Although it may be tempting to borrow other businesses' standard terms, care needs to be taken as (potential copyright issues aside), although they may be expertly drafted, they may not reflect your school's specific needs.

Another solution is to negotiate amendments to the other party's terms to ensure, for example, that the contract can cope with any changing requirements, that it supports the school, and that the contract may be terminated or amended based upon failures on the part of the supplier. Consider also whether it would be beneficial to be tied in to a long term contract or not. You should never be afraid to ask a supplier to change something in their standard terms - after all, if your supplier is insisting on keeping a potentially nasty clause in its terms, are you certain that you want to be doing business with them in the first place?

Another complex subject to consider for inclusion in any contract is data protection. Schools must always be careful when contracting for third parties to come into the school to provide services. If they have access to personal data, such as from the school's pupils, and sell or accidentally publish some of this information, the school will be liable for any consequences arising from that breach. It is therefore essential, in these types of contracts, to provide for the third party to comply with all applicable data protection legislation and that, should they breach this term, the school will be protected from any costs arising from the situation by recovering them from the third party. This is a principle, which could be applied to any situation leading to losses caused by a third party.

For any advice or assistance on dealing with third parties, procurement requirements, standard terms and conditions or similar, contact John Pickervance, Associate Solicitor at Forbes Solicitors on 0333 207 1134 or at John Pickervance.

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