When you’re building a business, particularly if you’re advertising or selling online, you need to think long and hard about the terms and conditions that control use of your website and sales of your products or services.
Your terms and conditions are the rules other parties must follow when they work with you. You may need different sets of terms and conditions for your customers, suppliers, and vendors. All of these terms and conditions lay out each party’s role, rights, and responsibilities. They should also outline each party’s remedy if the other individual or business doesn’t uphold their end of the bargain. Essentially, your terms and conditions should address potential questions and problems before they occur.
There are many generic terms and conditions out there, similar to free online contracts. However, it’s far better to work with a business attorney to draft provisions relevant to your industry, business, and customers.
Terms and conditions you may need
“Terms and conditions really will vary depending on the nature of the client’s business,” says Dan Rose, a business attorney with Rose Grasch Camenisch Mains PLLC. “That’s probably the first consideration—is trying to determine and understand exactly what business the client is.” Your various sets of terms and conditions may differ depending on your industry, the products and services you offer, and who you work with. The variety of what you can and should include is one of the reasons why you should work with an experienced lawyer when drafting your terms and conditions. However, there are a number of provisions it may behoove you to include:
- Your business’s legal name
- Your business’s address, where legal notice may be sent
- Definitions of the products and/or services you sell
- Any specific guarantees or warranties regarding the products or service
- Definitions of any terms that may not be commonly recognized by the other party
- A disclaimer that customers are subject to the terms and conditions when they do business with your company
- Informing on pricing
- When prices are subject to change
- Whether prices include or exclude taxes
- Which taxes may apply to the sale of the products or services
- Payment options
- When payment is due
- How the products and/or services are delivered
- The price of shipping
- When a shipped item may be subject to import/export fees
Returns, Exchanges, Refunds
- When and how returns are allowed
- When and how exchanges are allowed
- When and how a customer may receive a full refund or credit
- Whether any fees are deducted from a return
- The information your company collects and saves
- How your business uses “cookies”
- How you protect other parties’ privacy, including their personal, business, and/or financial information
- When the business may or will share other parties’ information
- Notice of your business’s copyright protections
- Notice of your business’s trademark protections
- Notice of your business’s patent protections
- Notice of enforcement of your business’s intellectual property rights
- Each party’s remedial options if the other does not perform as agreed upon
- Financial damages a party may be entitled to, such as interest
- Which state’s laws govern the agreement
This is the tip of the iceberg when it comes to everything you may need to include in your terms and conditions. While you may have a good idea of where to start for your business, it is best to speak with a lawyer as soon as you can to ensure your terms and conditions are clear, thorough, and protect the business.
Terms and conditions protect your business
Whenever you sell a product or service, you open yourself up to risk. What if a client isn’t satisfied with the product or service? What if a crucial vendor doesn’t deliver on time so you can’t either? What if a customer gets hurt? All of these potential risks could lead to financial, legal, and reputational problems for your business. That’s why you need to set up the terms and conditions of your business.
If there is a problem with a customer, the way in which your business handles the dispute should be outlined in the terms and conditions. For example, consider how Amazon handles returns. People often purchase an item and then want to send it back. The item may be defective, it may not be what the customer expected, or it may not work for what the customer wanted. Amazon specifically addresses returns and refunds in their Conditions of Use, and it provides a link to additional information.
Your terms and conditions protect you from disputes about returning items because the customer agrees to those terms when they purchase the good from your website. The customer may argue with you, but your terms and conditions gives you a layer of legal protection.
Terms and conditions should be reviewed and updated
Your initial terms and conditions can last you quite a long time, particularly if there are no major changes to your business or the law. That does not mean you should write them and then ignore them. Legal changes in states where you do business may require you to update the terms and conditions, this includes statutory changes and the outcomes of important court cases. Terms and Conditions “ought to be revisited at least once a year,” Rose says. “Check periodically if there is legislation that has been passed, either in locations where the seller is located or where they do a lot of their business, to determine if there are any changes in the laws that would impact their terms and conditions.”
For example, a recent change in the European Union’s law led many businesses to update their terms and conditions. The General Data Protection Regulation (GDPR), went into effect May 25, 2018, and it applied to companies and individuals doing business in the EU. The GDPR created a number of rights for consumers and responsibilities for companies, as well as fines for businesses that fail to comply with the law.
If you’re starting a new business or haven’t reviewed your terms and conditions in a while, set up an appointment with an experienced business attorney right away.