Essential Terms and Disclaimers: How South African SMEs Can Secure Fair Deals in Public and Private Tenders

In South Africa’s competitive business environment, small and medium-sized enterprises (SMEs) need to protect their interests when pursuing growth opportunities. One of the most effective ways to do this is by proactively incorporating their standard terms and conditions (T&Cs) when engaging with potential clients, especially in both public and private tenders. These T&Cs serve as a protective measure and provide a solid foundation for negotiations, ensuring both parties are aligned from the outset. Unfortunately, many SMEs overlook this crucial step, leaving themselves vulnerable to unfavourable terms imposed by clients or government entities.

In both public and private tenders, SMEs risk being subjected to conditions dictated by the client if they do not establish their T&Cs upfront. This can lead to skewed negotiations where the SME is pressured into accepting terms that may not be in their best interests. By proactively including their T&Cs in tenders, SMEs can maintain control of key issues such as delivery timelines, liability, warranties, and—most importantly—pricing. In both sectors, clients may not always have a comprehensive understanding of the solution required, making it even more critical for SMEs to protect themselves against potential scope creep or unexpected demands. By laying out their terms from the start, SMEs ensure they are negotiating from a position of strength rather than reacting to conditions imposed after the fact.

A particularly important element of these T&Cs is the inclusion of a disclaimer, especially in tender submissions. In both public and private sectors, clients may have only a partial understanding of their needs when putting out a call for tenders. As a result, entrepreneurs should clearly state that the proposed price is based on the information provided at the time of the bid. A disclaimer allows SMEs to indicate that the price may change should post-bid engagements reveal additional requirements or complexities not previously considered. This approach ensures that SMEs are not locked into a price that does not accurately reflect the true scope of the project, protecting their bottom line from unexpected costs.

The issue of pricing is particularly sensitive in tenders, as both public and private entities often seek cost-effective solutions. However, without clear T&Cs, SMEs may be forced to absorb extra costs due to scope changes, delayed payments, or additional work not originally accounted for. By incorporating their payment terms, including provisions for price adjustments and penalties for late payments, SMEs can protect themselves from financial strain and ensure fair compensation for any additional work that may arise after the bid has been submitted.

Including a disclaimer and robust T&Cs in tender proposals also fosters transparency and reduces the likelihood of disputes or misunderstandings. It sets clear expectations regarding the project scope, timelines, payment terms, and responsibilities. This is especially important in public sector tenders, where adherence to strict procurement regulations is crucial. By establishing clear terms upfront, SMEs not only protect their interests but also build trust with both private and government clients by demonstrating professionalism and a commitment to transparency.

In conclusion, for South African SMEs bidding in both public and private tenders, including their T&Cs and a well-crafted disclaimer is not just a protective measure—it’s a necessity. This ensures they maintain control over key aspects of the project, safeguard their financial interests, and avoid being disadvantaged by unforeseen changes in the scope of work. By setting clear terms from the beginning, SMEs can foster transparent, efficient, and mutually beneficial relationships with their clients while protecting their business from undue risks.

The StartUp Legal is a legal consultancy that provides quality legal services and support to SMEs, at affordable rates. For personalized legal advice and support, consider consulting with The StartUp Legal, your trusted partner in navigating the legal landscape of entrepreneurship. Book a complimentary consultation with us using the following link: https://calendar.app.google/nYmsKrdUosu6ELGU6