Terms and Conditions: Frequently Asked Questions

Whatever type of business or service you are in, you and your customers need a clear understanding of how things work. A Terms and Conditions agreement is a key way to establish and set out that understanding. Here are some of the most frequently asked questions about Terms and Conditions agreements.

What is a Terms and Conditions Agreement?

A Terms and Conditions agreement is a legal agreement that explains what the terms of the relationship are, and what the conditions of maintaining that relationship are. For example, a standard Terms and Conditions agreement will include clauses addressing points such as the following:

• What the rules are to maintain the relationship
• How the agreement can be terminated
• Any restrictions on use, age limits, etc.
• Payment terms
• Delivery terms
• Return and refund terms
• Governing law for the agreement
• Limits on liability
• Warranty disclaimers

Is A Terms and Conditions Agreement The Same As Terms or Use of Terms of Service?

In short, yes. These names can be interchangeable for legal agreements that set out expectations of each party such as what they must do, what they can do, what they cannot do, and what happens if something goes wrong.

In practice, different businesses use different terminology in different circumstances. Some may be used more often in particular circumstances such as:

• Terms and Conditions agreement when there's a buyer and seller
• Terms of Service when there's an ongoing arrangement or where there's a free service
• Terms of Use when the emphasis is on restricting what the user can and can't do

Is A Terms and Conditions Agreement Legally Required?

No. There's usually nothing to stop you selling or supplying a product or service without a Terms and Conditions Agreement. Instead, it's something you can (and should) choose to do to:

• Establish legal rights and let you enforce them
• Avoid ambiguity and assumptions
• Inform customers and build authority

Is A Terms And Conditions Agreement A Contract?

Used and written correctly, a Terms and Conditions agreement will either be a contract in itself or form part of a wider contract.

A contract is simply a legal agreement between two parties that a court will enforce. Although the precise details vary between legal systems, something normally qualifies as a contract if:

• One side makes an offer with a set of terms
• The other side accepts the terms
• Both sides have the legal right to agree to the contract
• The activities involved are lawful

A Terms and Conditions agreement will normally meet this criteria. A court will often treat it as part of a contract alongside another document or agreement. In the example we gave earlier of a widget manufacturer selling to a customer, the order form could include the price, quantity and delivery date, along with a line saying the order was covered by the company's Terms and Conditions. Accepting a customer's order would create a contract that incorporated both the order form and the Terms and Conditions agreement.

Some legal systems say a contract must involve consideration. Despite the name, it doesn't mean anyone "considered" the agreement before signing it. Instead it means both sides provide something of value, such as goods from a seller and money from a buyer. This can be interpreted quite liberally, however.

For example, if you run a free website with a message board, your Terms and Conditions agreement might say users can't post indecent images. A user refraining from posting such images is of value (it avoids wasting your time taking them down, or other users being deterred from visiting), so can count as consideration.

Is a Terms and Conditions Agreement The Same As A Privacy Policy?

No, these agreements are not the same thing. A Privacy Policy explains what user data is collected, how the data is used, and what rights the parties have. It is a legally required document.

A Terms and Conditions agreement explains the terms and conditions for using a website or service, or making a purchase.

What Clauses Go In A Terms & Conditions Agreement?

Include any legal point relevant to your relationship that you need to establish and make clear, particularly anything that might result in a legal dispute. We've detailed some of the most common clauses in Terms and Conditions agreements below.

• Payment clauses: Set out any information customers need to know other than the price for a particular purchase. This could include how you handle, display or calculate taxes, the currencies people can pay in and how you handle exchange rates, the acceptable methods of payment and any handling fees for particular methods, and any late payment fees.
• Delivery clauses: Set out your delivery methods and the associated charges. Detail any schedules or deadlines and whether these are merely advisory or if you offer compensation for a late delivery.
• Refunds: If you have a dedicated Return and Refund Policy, link to it. Otherwise set out details of when you do and do not offer refunds or replacements, including for cases where the customer has simply changed their mind. Also include sny special exceptions, how to and where to return goods and request a refund, timescales and deadlines, and fees, and how you will issue a refund (eg cash or store credit). Be careful not to imply the customer doesn't have the right to a refund in cases where the law requires one, such as if goods are faulty.
• Warranty Disclaimer & Limitation of Liability: A warranty is a promise you make to a customer. A warranty disclaimer makes clear you are not making a promise. Liability is your responsibility, particularly for any harm or loss caused to the customer. A limitation of liability restricts this responsibility. The safest way to use these is to make clear you are not making any warranties and do not accept any forms of liability except those you have specifically listed. With liability, you could restrict your liability to a specific amount or detail a method of calculation, for example limiting liability to the amount the customer has paid. Check whether the law in your jurisdiction restricts warranty disclaimers or limitation of liability. For example, a clause saying you have no liability even if your negligence causes harm might not be enforceable.
• Governing Law: State which country or regions law governs the agreement, which court system will handle any dispute, and whether you must use an alternative resolution method (such as arbitration) before, or instead of, going to court.
• User Requirements: Set out any restrictions or requirements that the customer must follow when using your product or service. Set out the consequences of breaking these rules.
• Privacy: Normally you'll have a separate Privacy Policy. If so, briefly mention and link to it. If not, give a very brief overview of the types of personal data you handle, why and how you use it, and how people can exercise their data rights.
• Intellectual Property: This involves copyright, trademarks and proprietary content. Make sure to address your intellectual property rights and restrictions on customers to protect these rights, and the customer's rights, for example in material they post on your site. Also state that you aren't responsible for a breach if a customer uploads copyrighted material. Make sure this disclaimer is legally valid as different jurisdictions have different rules on what actions you must take to avoid being liable for customer actions.
• Termination of the agreement and accounts: Set out how and why one or both parties can end the agreement and the consequences of doing so. This is normally more relevant to an ongoing relationship such as a service subscription or a user account on a website.

How Do You Display a Terms and Conditions Agreement?

Make sure customers can see the Terms and Conditions Agreement both before and after making a purchase, signing up to a service or otherwise stating a legal relationship with you. Make it readily available on your website. Either link to it from every page (for example through a footer menu) or include it in a logical section such as "Legal" that is linked to from every page. This applies to mobile apps as well.

CNN has a clear link to its agreement (called "Terms of Use") in the footer menu of every page, alongside other legal information:

How Do You Get Agreement to Your Terms and Conditions Agreement?

The best way to get agreement for your T&C is to use one of the following to get users to show consent:

• A tickbox or similar measure that requires a positive action by the user
• A clear statement that ticking the box (or other relevant action) constitutes acceptance of the agreement
• A clear link to the Terms and Conditions agreement itself

Here's an example of a sign-up page that does all of these. A user who simply clicks on the "Create" button without ticking the terms and conditions box is unable to proceed:

Summary

A Terms and Conditions agreement sets out rules for the legal relationship between you and a customer or user.

It should cover key points of potential dispute, often including payment terms, refunds, warranty disclaimers, liability, the legal process for disputes, user rules, privacy, intellectual property, and termination.

Display your Terms and Conditions agreement clearly on your website. Make sure you get active confirmation from the user that they agree to it before you accept an order or let them sign up to an account.