Terms and Conditions May Apply
This is the third blog in our series about Legal Documents you need for your website. Our first blog, Web Legal 101, gives an overview of Privacy Policies, Terms and Conditions, and Cookie Policies. Our second blog takes a detailed look at Privacy Policies, and our fourth gives you a deep dive into Cookie Policies.
Roll with me on this analogy. You are in court because a feisty customer claimed that you misrepresented something on your website. The judge asks you if you have any evidence to submit on your behalf. You confidently stride up to the bench and empty the junk drawer of your desk in his lap. The judge sorts through rubber bands, paper clips, and promotional koozies, and nods. “Did you agree to this?” he asks your customer. “Well, yes,” they respond. The judge slams down his gavel and rules in your favor.
And, scene.
Legally, you probably have to create a Privacy Policy for your website. In the US, you do not legally have to post Terms and Conditions. But, you see, the Terms and Conditions is the junk drawer of everything you want to tell your customer and every policy you need them to agree to. In an ecommerce site, the customer is required to check that little “I agree” box that they didn’t read before they can make a purchase. That checkmark is their consent and agreement to abide by the rules and policies that you have established.
A well-crafted Terms and Conditions Agreement will stand up in court as a legally binding document and protect your company. In fact, it is the best COA that an online company can have.
Yes, dear reader, you are in for a ride through legalville. But we promise that we will explain this crazy important document in a straightforward and easily understandable way, de-code all the terminology used, and let you know what is vital to include.
But first, the obvious:
We are not lawyers. We are not a law firm. Nothing that we say or write should ever be used or seen as a substitute for professional legal advice. At most, you should take any of our discussion of legal issues in the same way that you would take good advice from your gardener neighbor about pruning your shrubs. (Our lawyer made us say that. Not the shrubs bit, though. We added that in ourselves.)
What Is A Terms and Conditions Agreement?
A Terms and Conditions Agreement is a legal contract between your company and the website user, setting out the ground rules of how both parties should act and what both parties should expect from each other.
This is where your customer can source all the information regarding their rights when engaging with you. And, it is where your company establishes all of its business policies, which protects you from legal disputes and liabilities.
Establishing Terms and Conditions is good for both the business and the customer. Although they are not legally required, a website’s Terms and Conditions often include information that is legally mandated, such as users’ rights, withdrawal or cancellation disclosures, or legally mandated information required by consumer protection regulations.
This is the single largest legal protection an online business can have. And yes, if it is written to fulfill all requirements, your Terms and Conditions will be a legal, contractual agreement between you and your customers.
All that being said, Terms and Conditions are generally huge catch-all policies. Before we discuss what you should include in your agreement, we need to look at the kooky, inbred world of other documents that can be used in place of (or included in) a Terms and Conditions Agreement.
Are All These Documents The Same?
Alas, a Terms and Conditions by any other name is still confusing.
We need to get very close up and friendly with Terms and Conditions and lots of other very similar legal documents here, so we are going to start referring to our guy by his nickname, T&C. T&C are agreements used to govern the relationship between a business and its consumers, and so can cover a broad scope of topics. Because of the nature of this document, it is frequently used as a catch-all, addressing an array of subjects that could be separated out as independent documents. Recently in the world-wide-web world, the name T&C has been used loosely and interchangeably with many other legal agreements that serve similar or more specific functions. So, we need to take a peek at the other legal docs that T&C can replace or include. Remember, with all the contractual agreements that we are looking at here, they are only valid if the end-user actively agrees to it! (We will go over check the box, opt-in, shrink-wrap licensing and click-wrap licensing later on.)
Terms of Service (TOS or ToS)
also called
Terms of Use (TOU), Terms
and may include
SaaS Sales Agreement, Service-Level Agreement (SLA)
There is no real legal difference between Terms and Conditions, Terms of Service, and Terms of Use, and they all tend to be used interchangeably.
The term TOS or TOU is often applied when the website is more specifically dealing with a software or online service (rather than sites such as an online store). But, just like T&C, these are wide-reaching documents that regulate the entire interaction between user and website from browsing, to downloading, uploading, and purchasing. The TOS defines the rules that a visitor must follow to be permitted to use a service.
The types of online services that TOS tend to cover are websites and apps that the user communicates with (for free or with a paid subscription), but does not need to download or install any software to use. These are called Software as a Service (SaaS), with Facebook and Instagram as examples. With SaaS, the user doesn’t have a copy of Facebook on their computer, but is provided access to Facebook through a user account.
Within the TOS or T&C there may be a SaaS Sales Agreement or a Service-Level Agreement that specifically establishes service expectations, such as performance and uptime guarantees or support obligations. These agreements can also be introduced as standalone documents.
End User License Agreement (EULA)
also called
Software License Agreement (SLA), Licensed Application End-User Agreement
Much more specific and limited than T&C or TOS, EULA focuses on a licensing relationship between an owner of a product (often copyrighted software) and the end-user. It is a licensor / licensee contract, required by law, and usually presented to users during the installation of the software.
A TOS would be appropriate if the user is working online with your software, such as a SaaS. If the user downloads your software onto their computer or phone so that the user has a copy of the software, then a EULA is appropriate. With a EULA, you still own the copyright to the software, but you are granting a license for use to the person who bought a copy. This is a single-sale, non-subscription purchase.
EULAs typically contain verbiage that grants the license, details limitations of use, restrictions on the user (such as not to sharing the software with others, reverse engineering, or making copies of the software), conditions under which a user’s access might be limited or terminated, copyright provisions, limitation of liability, and warranty.
Since EULAs are very specific licenses, they can be included in a TOS agreement, but are not a substitute for a TOS, which covers expected user behavior and rules for the use of the service or software.
Acceptable Use Policy (AUP)
also called
Internet and E-mail Policy, Internet AUP, Network AUP, Acceptable IT Use Policy, Fair Use Policy
AUPs are more specific than TOS, as they establish the behavior guidelines for users that are connected to a computer network. Businesses, schools, and Internet service providers will require a user to agree to an AUP before granting access to the Internet or their intranet.
These agreements are meant to ensure the security of the network (eliminating downloads of attachments or visits to unsecured websites to avoid viruses and hacking), protect the owners of the network from liability (users violating the law while using the network, pirating music or movies, sending spam emails), or to eliminate distractions in favor of productivity (students watching YouTube, employees browsing social media or online shopping during work).
Why You Need A Terms And Conditions Agreement
The two main purposes of a Terms and Conditions Agreement are to establish how visitors may use your site and provide the single largest legal protection an online business can have. However, there are many reasons why you should create a T&C.
Helps you establish and maintain more control over how transactions will be handled
Ensures a smooth, transparent business relationship with your users and customers
Helps protect your business from legal disputes and liabilities
Informs customers about payment terms, shipping policies, and returns or refund policies
Contains legally mandated information required by consumer protection regulations (especially in the case of ecommerce)
Allows you to deactivate a user account, withdraw or suspend service, or cancel a transaction
Protects your intellectual property rights with a copyright clause
Sets governing law, which establishes the country and state law is your company governed by
Makes your business look more professional and trustworthy
What A Terms and Conditions Contains
There are 5 major topics (or clauses) that a Terms and Conditions on your website needs to address to ensure that it legally protects your company. You may prefer to publish some of these policies separately in addition to including them in the T&C (usually shipping and return policies), but Terms and Conditions agreements certainly can be used as a catch-all document, containing:
1. Introductory Clause (Establishing the Rules of the Playground)
This is where you identify your business by providing seller contact details and describe the service that you offer. Then, you can let users know all of the rules, rights, responsibilities, guidelines, and regulations that govern the use of your website, and what happens if those rules are broken. Be sure and cover all areas of your business, including:
• Return, Exchange, Cancellation, and Refund Policy
Detail what products or services are eligible for return, exchange, cancellation, or refund, under what conditions, and in what time frame you will accept returns, and the steps that the customer needs to follow to initiate a return.
A return policy is an absolute necessity for an ecommerce website. People need to trust in your brand before they will buy from you online. Providing your audience with a clear, detailed return policy helps manage their expectations before they buy and gives them a feeling of security, which helps build that trust.
Some business owners are hesitant to commit to a consistent return policy, worried that they will appear too rigid and unfriendly. In fact, the opposite is true. Rather than frightening off customers, a fair, clear, and consistent return policy can increase conversion and repeat rates.
Your return policy helps protect your business from inappropriate returns and credit card chargebacks that could cause financial loss, and provides the guidelines that make it easier to handle returns by enforcing consistency.
When writing your return policy, consider:
What products or services are eligible for return, exchange, or refund
The process and steps that the customer needs to follow to initiate a return
The time frame in which you will accept returns
Under what conditions you will accept returns
What condition must the item be in to be eligible for return
How refunds will be made
Who is responsible for return shipping
• Shipping and Delivery Policy
Being able to provide your customers with a detailed shipping policy not only manages customer expectations, it also gives them important information that they may need to make the final choices on their purchase.
It should explain all of the domestic and international shipping options that they have available to them, the cost of each option, how long each method will take, expected handling and processing time, and cut-off times for ordering. This information lets your customer make an informed decision on what shipping method to choose.
• Conditions of Use or Purchase
Any restrictions or conditions that need to be attached to the use, purchase, or shipping of anything on your website, should be listed here, such as:
Personal use only
Age or location restrictions
Any shipping restrictions, including no P.O. boxes, or adult signature required
• Payments
If there is any exchange of payment for services or products on your website, then you need to address what happens if payments aren’t made in a timely manner or if a payment method fails.
• Acceptable Behavior
Establish your definition for abusive behavior and language in the context of the website visitor interacting with customer service or in comments and reviews.
2. Limit Liability (Warranty Disclaimer)
In business, it’s impossible to plan for every eventuality. Disclaimers specifically explain what your website does not promise or guarantee. Frequently, these disclaimers address liability.
This clause limits your liability due to system issues, delivery and website issues, platform problems, and all the other things that you can’t control, such as:
Website Errors: You cannot be held responsible for any errors, omissions, inaccuracies, or oversights in the content presented on your website, including the descriptions, pictures, or pricing.
Delivery Issues: You can’t guarantee that every delivery will arrive within the estimated time frame or that shipments won’t sometimes get delayed.
User Interactions or Responses: You can’t be liable for users’ actions or reactions to your website, including any medical, financial, or legal advice the user chooses to act on, or if a user is exposed to offensive content uploaded by others.
Third Parties: You are not responsible for the security or quality of third-party websites that link to your site.
Product Failure: You can’t guarantee that every item you sell will be flawless or will perform perfectly.
Product Availability: If an item is unexpectedly out of stock after an order is placed, you can reserve the right to refuse the order.
The big kahuna of things to include here is an indemnity (or hold harmless) clause. Especially in the case of user generated content, this clause protects you from a variety of legal issues. In it, the user agrees to indemnify and hold your company harmless against losses, damages, and costs resulting from breaking the rules. Which means, if you include this global “NOT IT” clause, the user becomes legally responsible for any costs associated with illegal activity they commit on your company’s site.
For instance: Barry the Troubled User goes on your website and spreads lies and harms the reputation and character of Miss Perfect Angel Suzie. Barry just committed defamation. If Miss Perfect Angel Suzie sues your company because it happened on your website, Barry is the one on the hook. Barry would be responsible for paying any legal costs or damages that you incur. (Barry the Troubled User is also going to be subject to #5 clause below!)
All of these disclaimers limit your liability should a visitor have any issues, problems, or incur damage of any sort related to your website.
3. Copyright (Intellectual Property clause)
The copyright policy makes clear that you are the owner of the content on your website (logo, writing, images, videos, and anything else that you have created) and as your property, everything is protected by international copyright laws.
4. Set Governing Law
Lets customers know which laws (country and state) your company, website, and T&C are operating under. These laws should come from the location that your company is headquartered or the location from which you operate your website.
5. Termination Clause
Informs users that any accounts on your website, or users’ access to your website can be terminated in case of abuses or at your sole discretion. It is best to make this clause very broad, to allow you to apply it whenever reasonable.
Quick Heads-Up For International Sellers
Under most international consumer laws, in addition to the required Privacy Policy disclosures, you’ll need to inform customers of the following:
Identifying information such as a legal address and business name
Seller contact details, such as email address
Rights of consumers (such as withdrawal rights), where applicable
Warranty and guarantee information, where applicable
Safety information, including instructions for proper use, where applicable
Terms of delivery of product or service
Returns and refund details
User Acceptance
We mentioned before that if written properly, a Terms and Conditions agreement is legally binding and will hold up in court. When a user agrees to the terms, they are then legally obligated to follow the policy. This gives your site the ability to take appropriate action if a user violates the agreement.
To have a valid contract, both parties have to agree to all of the details that it contains. Since you published the website, it is assumed that you agree with the Terms and Conditions. But it is essential that your customers do the same. Here are some of the ways that websites, services, and softwares gain that user acceptance.
Click The Box And Opt-In
“I have read and agree to the Terms and Conditions” is the biggest white lie since “It’s so good to see you!”
But, it is vital that users to your website click that little box confirming that they agree as well.
In ecommerce, this is commonly set up in the checkout process. Before a customer is allowed to place an order, they must acknowledge and agree to your Terms and Conditions by checking that little box. It is good practice to avoid using pre-checked boxes and instead request that your customers actively give consent, or opt-in. This allows you to retain proof of their active, purposeful, willful agreement.
Shrink-Wrap And Click-Wrap Licenses
The term shrink-wrap license refers to any software license agreement that is sealed in a package with software, and therefore is inaccessible to the customer until they have already purchased it. This applies to old-school I-bought-it-in-a-store-and-unwrapped-it software.
The modern equivalent, click-wrap licenses appear on screen during installation of the software (and after you have already purchased it), or on a website where the user must click an “I Agree” button on a pop-up window in order to continue.
The difficulty with both of these licensing processes is that they eliminate the possibility that a customer could review the agreement before purchasing the software. They are presented to users as a “take it or leave it” scenario. The user has the choice of either accepting the terms, clicking the “Yes” button (or continuing to use the purchased software), or the user can decline the terms and not use (or return) the software.
These methods don’t allow the customer to be completely informed of their contractual obligations before purchasing, and in some cases have been ruled unenforceable in court.
How to Create Your Terms and Conditions
OK! So how do you ensure that all the legal mumbo-jumbo is correct on your website? If you have already created a Privacy Policy, then the answer is very similar, so buckle up for some déjà-vu.
Here are your two options for creating a Terms and Conditions Agreement, and your one big no-no.
First Option:
Remember those online compliance software service websites that can build your Privacy Policy? Almost all of them can also generate Terms and Conditions. You answer some questions about your company, and they generate your Terms and Conditions for you. Some of the websites are free to use, some charge a flat fee or monthly subscription for advanced features that tailor the content more specifically to your business.
Pros: Inexpensive, Completed copy ready for you to use within minutes.
Cons: If your business is complex, you may need more customization. Some usage and legal terms may be confusing.
This route is a pretty inexpensive way to go, but it does require you to do your homework. Some popular, trusted, and reliable website generators for you to begin your research:
Second Option:
You guessed it. Get a lawyer to help you out. If you are not comfortable searching and comparing options offered by online websites and doing some reading up on the requirements yourself, then pass this work on. Remember, a T&C agreement is the contract that you create with your customer. This is the document that you may have to provide in court if everything goes sideways. A lawyer will help you sort out what you need to do and advise you on how to best protect your business while keeping everything legally binding.
Pros: Complete customization, along with having an expert advising specific and precise language to include to best protect your business.
Cons: Expense. It may be days before you have working copy.
The Big No-No
Seriously. Don’t cut and paste this one from another website. If you aren’t a lawyer, you probably won’t know if you are leaving out important clauses or scrambling the copy, making your Terms and Conditions useless in court.
Your Terms and Conditions act as the shield that your company can use to protect itself. This document is your single best source for COA. If your Privacy Policy isn’t adequate, you may get into some trouble and you may get fined. If your Terms and Conditions don’t fully protect your business, you may lose the business. Plus, copying someone else’s content is punishable as copyright infringement. And, as the Copyright or Intellectual Property Clause that protects your business is found in the Terms and Conditions, if you were to copy someone else’s, the irony alone could take you out.
Don’t treat this like a middle school homework assignment that you want to get out of. You are taking the time to craft the suit of armor and shield that will protect you from some pretty nasty dragons.
Final Question: Can I Just Dump Every Policy That My Website Needs Into One Big Legal Document And Post It?
The short answer is that if you are only talking about your Terms and Conditions Agreement, yes.
If you are trying to include a Privacy Policy or Cookie Policy in that mammoth legal document, then no.
You can toss every possible clause and disclaimer in your Terms and Conditions Agreement (return policy, copyright, disclaimers, shipping, Saas Sales Agreement, EULA, AUP, etc.), because it is the legal junk drawer where everything like that can be kept. An added benefit here is that your customer will have to actively agree to the T&C before purchase. If all legal is included here, then they will have consented to all of it.
However, it may be helpful to your customers to have some sections, such as the Shipping Policy or Return Policy, also exist on their own with an easily-found link, so that they can be easily referenced.
As for the other docs, the Privacy Policy needs to have an easily-seen and clearly marked link from the website’s homepage with the word “Privacy” conspicuous in the link. You can also add the terms of the Privacy Policy to your Terms and Conditions page if you wish, but you still must have separate Privacy Policy page with a direct link from the homepage.
If you need to have a Cookie Policy, it also must be an independent page. Users will have to be able to access this page by a link on your homepage, and by a link in a cookie banner that appears on your website whenever anyone visits. (You’ve probably seen quite a few of those recently!)
A Terms and Conditions Agreement lets you lay down all of the rules, requirements, and standards for users and visitors of your website and for interaction with your company.
Please do not think of this as a nerdy, friendless, nit-picking, tattle-tale document that has lawyered up. It is the exact opposite.
These are the rules of your playground that everyone (including you) are expected to play by. When you were a kid, you probably had ground rules like this that you and your friends set up and followed. If you hit the baseball into the trees, it is a foul. Since everybody knows that ahead of time, it doesn’t become an issue. It isn’t personal, it is just the rule.
Terms and Conditions Agreements let everyone know what to expect, how they need to act, and help you build trust and establish confidence with your users and customers. They also let everyone know who is responsible if the baseball goes through Old Man McGreggor’s window.
mini Monster also has detailed looks at other legal documents that you may need to create for your site. Check out our blogs on Privacy Policies and Cookie Policies.
