A Terms and Conditions agreement is a document that aims to clarify the relationship between your business and your customers.
Also known as Terms of Use and Terms of Service, your agreement will include important information about the boundaries of this relationship. This document is the contract that you and your customer enter into when you begin your business together.
You may not be legally required to have a Terms and Conditions agreement, but it's a smart move - this document sets out clear expectations for customers and for the business, forming the basis of the trusting relationship essential for growth. Having the right agreement for your business will also protect you from legal liability should a dispute arise. It states what your business will do, and what it won't; the responsibilities of both your business and your customers.
Every business is different, and your agreement should be tailored to the needs of your business. We'll go through the essential elements to help you understand what needs to be in your agreement, and why.
Note: This article provides a framework for an effective Terms and Conditions agreement, which applies to both websites and apps. Some of the elements we discuss may not be necessary for your business's agreement, so please consider their relevance to your needs.
The structure is flexible, too, and your agreement doesn't need to be arranged in the same way. Have a look at businesses that are similar to yours, how they structure their agreements, and what they include.
We'll break this agreement framework down into sections, explaining what each does, and why it's included.
Introduction: Here, we explain briefly what the agreement does, its purpose - it sets out the rules of the customer's use of your website/app - and where it applies, its scope - your website/app.
Definitions: Some business's agreements include this section, some don't. If your agreement includes ambiguous language - for example legalese or other industry-specific jargon, or terms that mean different things in different contexts, it may be a good idea to include definitions. Often, businesses provide definitions throughout the agreement instead of in their own section.
Acceptance of Terms: This is often a simple statement: "by using this service, you agree to the terms and conditions provided.
It's good practice to require active acceptance of your agreement - doing so protects your business by ensuring that you have record of the customer's explicit agreement.
Businesses where the service begins on entering the website, eg social media, use a pop-up at registration. When the provision of service begins at the end of the interaction, eg when you're selling products to be shipped, common practice is to include this at check out, requiring a box to be ticked before the purchase can be made.
Eligibility: Who your customers are. If your business has any restrictions on who can use your service, for example a minimum age or that you only service a certain geographical area, include that information here. A social media service may require a minimum age of 13, while a store may only ship within the continental United States.
User Obligations: What you require from your customers. Examples: if customers make accounts on your website, they are required to provide accurate information, they must comply with all applicable laws and not engage in fraud or hacking, they must not use your platform for distribution of promotional material or harmful content, they must not reproduce your intellectual property.
Services Provided: A brief description of what your business does, and possible limitations. Eg: We provide general financial advice for educational purposes; you should also seek tailored advice from a qualified professional. We sell camping goods and while we do quality testing quality may vary due to the nature of the product and supply disruptions. Our service may be unavailable due to maintenance or technical disruption.
State what your business provides, and potential limitations to this provision through your website/app.
Payment & Pricing: Your business relies on payments, and outlining the rules can save a lot of headache and wasted time when it comes time to deal with disputes and chargebacks.
Delivery: Whether you're delivering a service or physical products, let your customers know how long they can expect to wait. Managing expectations is an important part of building relationships with your customers, and developing your business's reputation. Providing this information also protects your business from unreasonable claims from customers who expect something other than what you have promised.
If you have different options for shipping or for service delivery that customers can choose from, or circumstances that will affect the delivery time, include that information here.
Intellectual Property: State here which parts of your website/app are your property, protected by trademark, copyright and other proprietary content laws. The bits of your website that cannot be used without your permission - your logo, business name, your writing.
Limitation of Liability: Outline the limits of your business's liability. A website that provides legal advice is likely to say that the information provided is general in nature, and does not constitute legal advice. This part basically says "we have explained exactly what our product/service is, and we have been clear about the responsibility we're willing to accept if something should go wrong."
Links to Other Websites: Explain that your business provides links to other websites and content for the benefit of your customers, that these links do not mean that you have control over or affiliation with those organisations, and that you are not responsible for the content of these linked resources.
Modifications: If your terms and conditions will be modified, and if you'll let your customers know. Usually, it'll say something to the effect of "these terms are subject to change, and it's your job to check if they have."
Termination: State the conditions under which this agreement will be terminated, either by your business or by the customer. Let them know if they can cancel their account, and that if they breach this agreement or fail to pay you may cancel it for them. Include whichever rules are most important for you - the rest are already in the agreement. Often, this will say something like "we reserve the right to terminate this agreement at our sole discretion."
Privacy Policy: If your business processes personal information, you are generally required by law to provide a Privacy Policy detailing how this information is used. Personal information includes names and email addresses, so it's likely you will need one. Your Privacy Policy will need to be a separate document, so usually this section gives a brief overview and provides a link to the Privacy Policy.
This section sets out what happens when disputes do arise between your business and your customers.
Governing Law: Which country/state's laws apply to disputes regarding your interactions with your customers? Generally, this is the jurisdiction where your business is registered and/or operates. Without this, disputes may be found to be governed by the law in your customer's jurisdiction, and in the case of many businesses operating online, this could be anywhere. Disputes being governed by your local jurisdiction will make it much easier for you to manage the process.
Resolution Methods: How will your business resolve disputes? What are the methods, and how should the customer start? If relevant, include details about arbitration, mediation, or other dispute resolution processes. It's a good idea to start by saying that in case of dispute, customers are required to first contact you directly.
Contact Information: Provide a way for customers to reach you with questions or concerns. Of course, it's not possible to write a Terms agreement that explains everything your customers need to know, in a way they understand. Providing a way for them to get in touch with you opens an avenue for communication about the relationship between them and your business.