Why you need clear-cut terms and conditions for your business

Terms and conditions

Every time you enter a business arrangement with another party, there’s a chance you could be held liable in case something goes wrong.

As such, having clear-cut terms and conditions for the services or products your business provides is key for reducing that legal exposure.

The terms and conditions pages you see all over the web are essentially contracts. Not only do they protect you, but they also provide your users with all the information they need about how the business relationship will work. In a nutshell, they’re essential for any business. Let’s dig deeper into what they are and how they work.

What Terms and Conditions Are

Terms and conditions pages go by many names, including Terms of Service (ToS), ‘terms of use’, End-User License Agreement (EULA), and ‘general conditions.’ They are legally binding agreements that lay out the conditions of use for the services you provide.

For example, if you sell a digital service your terms and conditions page would outline appropriate use. In cases where you have users that break those rules or abuse the service, you’d retain the right to terminate their accounts.

Without the agreement that users must accept when they retain your services, you might be legally liable if you terminate those accounts after receiving payment. This is just one example of the kind of clauses your terms and conditions should include. Other common elements within a ToS are:

  • Identification of your business and the services it provides.
  • Disclaimers concerning liabilities.
  • Warranty information, if applicable.
  • Instructions for proper or acceptable use of your service.
  • Copyright / licensing information.
  • Terms of delivery for the services you provide.
  • Conditions of use, which can include location and age restrictions, among others.
  • Information about your refund or exchange policies.

The clauses your terms and conditions include can vary depending on what kind of business you run. It’s also important to understand that this type of document is not the same as a privacy policy, which deals with the way you store and use visitor’s data. Privacy policies are all about protecting users, whereas terms and conditions protect your business.

How Terms and Conditions Reduce Risk for Your Business

Not only is it smart for your business to have clear-cut terms and conditions, for some types of operations – online stores, for example – they’re also a requirement of trading. For example, under most countries’ consumer laws, you need to inform your users about the following terms:

  • Legal identification for your business
  • Refund and warranty details
  • Safety information and proper use instructions
  • Terms of delivery for your products and services
  • Consumer rights in general

When it comes to terms and conditions, general contract laws apply. Therefore, to avoid liability, you need to outline a ‘fair’ contract. More importantly, users must know they’re entering into a contractual agreement. On a website, for example, that could mean ticking a checkbox with a link to the full agreement before being able to create an account or otherwise retain your services.

Why You Shouldn’t Use Terms and Agreements Templates

Considering how important user agreements are for legal protection and how much they can vary from one business to another, it generally isn’t the best idea to use basic templates. Templates are often generic and broad, and, in many cases, won’t hold up under legal scrutiny either due to missing disclosures or inaccurate information.

Ideally, you should aim for a tailor-made terms and conditions document that makes it easy for you to maximise proper legal coverage. Alternatively, seeking the advice and services of a lawyer is always a sound approach. Whichever solution you choose, remember that Terms and Conditions are meant to work for you and should therefore accurately reflect your business needs.