Whether you are just starting out on your journey or are simply looking to update your existing terms of service, your terms and conditions are critical to your business’ success. The terms of service you adopt will define the legal relationship between your business and its clients, and will determine the parameters as well as your rights and obligations. A poorly drafted set of terms and conditions may be unenforceable and could potentially expose you to liability.
1. Defining Your Business Offering
At the heart of any well-drafted terms of service is a comprehensive definition of your business offering. Your terms and conditions should state, with precision (as far as practicable), the goods and/or services that you provide. In defining your business offering, it may be useful to consider:
- Mode of acceptance;
- Express exclusions;
- Pre-requisites to access and/or use;
- Restrictions to access and/or use;
- Mode of delivery;
- Your obligations in providing the goods and/or services; and
- The recipient’s reporting or other obligations, if any.
2. Pricing, Invoicing, and Payment
A businesses’ ability to generate and maintain adequate levels of cash flow links directly to its capacity to obtain prompt payment for services and/or goods provided. Accordingly, getting paid on time is essential to the continued longevity of your business. Towards this end, the terms of service you employ should clearly set out:
- The costs associated with your business offering;
- Payment terms;
- The method of payment;
- Your rights upon default; and
- The debt recovery mechanisms you employ.
3. Intellectual Property and Confidential Information
If in providing your business offering you will make available materials which you own, or someone has licensed to you, it’s essential that your terms of service address the use that your client can make of your intellectual property. As such, your terms of service should clearly state:
- That you own the intellectual property rights in the materials provided;
- Whether use of the materials grants the recipient a licence, and if so on what terms; and
- Whether you purport to assign any intellectual property rights to the recipient, and if so upon what terms.
By the same token, if you provide or collect confidential information, it may be appropriate to include a non-disclosure clause in your terms of service. However, the suitability of such a clause will depend upon the facts of your particular case.
Your terms of service should include a termination clause that defines the circumstances under which either party to the agreement may end the relationship. Terms of service that fail to address termination are an invitation for disputes. When drafting such a clause, have consideration to the following:
- The circumstances under which the contract may be terminated;
- The notice period, if any; and
- The ancillary rights and obligations of each party upon default.
If you need assistance drafting your terms of service, let our business lawyers know on 1300 544 755.