In Short
- Terms and conditions protect your business from disputes by clearly outlining services, payment terms, and liabilities.
- They should include details on service scope, refund policies, and disclaimers to avoid misunderstandings.
- Properly drafted terms ensure compliance with Australian Consumer Law and limit potential liabilities.
Tips for Businesses
When drafting terms and conditions, be clear about your service details, payment terms, and delivery expectations. Include disclaimers and ensure your terms comply with Australian Consumer Law. This helps avoid disputes and provides clarity to both you and your customers. Regularly review and update your terms as your business evolves.
Having a clear set of terms and conditions of service is key to reducing misunderstandings between you and your customers or clients. They also help to protect your business and avoid expensive legal disputes. This article will explain your terms and conditions of service to ensure that you do not encounter any issues.
What are Terms and Conditions of Service?
A terms and conditions of service is a legally binding document. In essence, a terms and conditions document states the terms of the provision of services or goods from one party to another. Typically, customers must accept the terms before they procure your services online or in person.
For a business providing a service, your terms and conditions of service agreement should include information such as:
- the main commercial details of the transaction, including the parties and time period of the agreement;
- the services you will provide and any exclusions to that service;
- the price and the payment terms of the agreement;
- what happens if customers do not adhere to payment terms;
- how and who may terminate services and what will happen upon termination;
- if, how and when the terms can be updated or changed;
- ownership of any intellectual property and the provision of any necessary licences for a party to use the other party’s intellectual property;
- confidentiality and privacy provisions;
- the exclusion or limitation of your liability as the service provider, including a liability clause;
- dispute resolution processes and termination; and
- Australian Consumer Law liabilities and disclaimers.
Comprehensive terms and conditions of service provide certainty about your client’s rights and protect your business from potential disputes.
Types of Terms and Conditions
Terms and conditions have different forms depending on the needs of your business. These forms include a:
- terms of service or service agreement;
- client agreement; and
- sales terms and conditions.
What Disputes Can Arise?
Scope Disputes
Your terms and conditions of service will define the scope and terms of the relationship with your clients. Suppose you do not limit the scope of your business relationship. In that case, an argument may arise regarding your services and when you may terminate the relationship. Therefore, your terms and conditions should provide clarity about:
- the services you provide;
- when you will provide the services;
- how you will provide the services; and
- the duration of the relationship between the parties and how either party can end it.
For example, your client may procure catering services from you and expect the catering to include waitstaff to serve the food. However, your service only includes cooking and delivering the food to the venue. Your customer does not recall you mentioning that you do not provide waitstaff. Accordingly, they now want a refund as they have found an alternative caterer.
Payment Disputes
If you do not provide clear payment terms to your clients, there will be ambiguity around:
- what type of payment methods you accept;
- your invoicing process; and
- when you require payment for goods or services.
Failing to provide clear payment terms may lead to a dispute. For example, suppose your customer requires a car repair service from you. You have not purchased the materials to repair the car because you require payment of a 20% deposit on the services upfront. However, your customer thought they would be paying the entire amount for the repair services upon completion of the car repair service. You can prevent such misunderstandings by having explicit payment provisions in your terms and conditions of service.
Delivery Disputes
It is essential to clarify how and when you will deliver your services. Failing to do so can create disputes about failure to provide services within expected timeframes.
Refund Disputes
Your terms and conditions of service must be clear about the circumstances in which you will refund a client or customer. For example, suppose you provide photography services and require a non-refundable 50% deposit to be paid upfront. In that case, you must state that this deposit is non-refundable if the client terminates their arrangement with you. Failure to be clear about such a requirement in your terms and conditions may lead to the client expecting to receive their deposit back in the event of termination. This may potentially escalate to a dispute. In addition, refund terms must comply with the Australian Consumer Law guarantees.
Disclaimers
Your terms and conditions of service should also include disclaimers about your services. Disputes can arise if a client starts thinking your service is unsuitable for their purposes.
For example, if you provide a personal training service, you may need to distinguish between the provision of your training services and the provision of medical advice. A customer may procure your training services and rely on them to fix a medical problem without seeking medical advice. They may then want to dispute the effectiveness of your services because it did not fix their problem. You can avoid this if your terms and conditions of service include a disclaimer about seeking medical advice before procuring your personal training services to treat a medical condition.
You should carefully draft disclaimers to match the areas of risk for the particular provision of services. Remember, disclaimers cannot contract out of your obligations under the Australian Consumer Law and may not always be able to exclude negligence.
It’s now easier than ever to start a business online. But growing and sustaining an online business requires a great deal of attention and planning.
This How to Start an Online Business Manual covers all the essential topics you need to know about starting your online business.
The publication also includes eight case studies featuring leading Australian businesses and online influencers.
Australian Consumer Law and Limited Liabilities
Your terms and conditions of service must comply with the Australian Consumer Law guarantees. Such guarantees include that you:
- provide services with due care and skill;
- provide the results that you agree to provide; and
- deliver services within a reasonable time frame.
However, your terms and conditions of service can expressly limit your liability within the scope of the law, including having a monetary cap on your potential liability. For example, it is common to limit a business’ total liability towards a customer to the price paid for the relevant services by the customer.
Enforceability of Terms and Conditions
While drafting comprehensive terms and conditions is crucial, ensuring they are enforceable is equally important. Courts may deem your terms and conditions unenforceable if you fail to bring them to your customers’ attention properly or if they contain unfair contract terms.
To enhance enforceability, implement a clear and unambiguous acceptance process. For example, for online services, you can use a clickwrap agreement where the customers must actively tick a box or click ‘I agree’ before proceeding. Avoid pre-ticked boxes, as these may not constitute valid consent from the customer. For in-person services, you can provide a physical copy of the terms and conditions and obtain a signed acknowledgment from the customer.
Additionally, make your terms and conditions easily accessible. For websites, include a prominent link to the terms on every page, typically in the footer. For brick-and-mortar businesses, display a summary of the key terms in a visible location and offer full terms upon request. Regularly review and update your terms to reflect business practices or relevant laws changes. If you are making significant changes, notify your existing customers and obtain their renewed consent.
Key Takeaways
Your terms and conditions of service reduce the possibility of disputes arising with your clients. Thus, you must draft it accurately. Your terms should clearly outline the scope of the relationship, payment, refund allowances, delivery time frames, disclaimers and liabilities to protect your business and ensure that there is no ambiguity when a client procures your services.
If you need help with your terms and conditions, our experienced contract lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
Frequently Asked Questions
A terms and conditions of service is a legally binding document that a customer accepts prior to procuring a business’ services. This document provides certainty about your clients’ rights and protects your business from potential disputes.
The consumer guarantees set out a consumer’s rights to a repair, replacement or refund if the goods or services do not meet a requisite standard.
We appreciate your feedback – your submission has been successfully received.
