Your business terms and conditions reduce misunderstandings between you and your customers. They also help avoid expensive legal disputes. This article explains what your terms and conditions should include to ensure your sales go smoothly.
What Are Business Terms and Conditions?
A business’s terms and conditions agreement is a legally binding document. You will typically ask customers to accept the terms before making a purchase. For example, if you sell online, you might require customers to tick a checkbox stating their acceptance.
A well-drafted agreement contains information such as:
- the type of products provided;
- delivery of the products;
- payment terms;
- protection of intellectual property and confidential information;
- dispute resolution processes and termination; and
- Australian Consumer Law liabilities and disclaimers.
Comprehensive terms and conditions provide certainty about your customers’ rights and protect your business from potential disputes.
What Disputes Can Arise?
Scope Disputes
Your business terms and conditions will define the scope of the relationship with your clients. If you do not limit the scope of your business relationship, you will not know when either party may terminate it. Therefore, your terms and conditions should include:
- the products you will provide;
- when you will provide the products; and
- how you will provide the products.
If your business terms and conditions lack these details, you may rely on emails or conversations with your customers about what, when and how you will provide products. This can lead to misunderstandings and disputes. For example, your customer may purchase a product and expect delivery in one week. However, you may always deliver in two weeks. Your customer does not recall discussing these terms with you and wants a refund because they found an alternative that can be delivered earlier.
Payment Disputes
If you do not provide clear payment terms to your customers, they will not know the payment types you accept and when you require payment. Failing to provide clear payment terms may lead to a dispute.
For example, your customer purchases a new custom-made surfboard and asks when you will deliver it. You have not purchased the materials to make the surfboard because you need 20% of the product payment upfront. However, your customer thought they would pay for the surfboard after delivery. You can prevent this embarrassing problem by having clear payment terms and conditions.
Delivery Disputes
It is important to clarify how and when you will supply the product or service. Additionally, you should detail who bears delivery costs and what happens if goods are not supplied. Failing to do so can potentially create:
- delay disputes;
- disputes about unexpected delivery costs and who should pay for them; and
- product damage disputes.
Disclaimers
Your business terms and conditions should also include disclaimers about the products you sell. Disputes can arise if a customer believes your product is unsuitable for the purpose they bought it for.
For example, you may need to distinguish between your medical products and providing medical advice. A customer may purchase your medical product and rely on it to fix their medical problem without seeking medical advice. Consequently, they may dispute the authenticity of your medical product because it did not fix their problem. You can avoid this by including a disclaimer about seeking medical advice before purchasing your products.
Australian Consumer Law and Limited Liabilities
Your business terms and conditions must comply with the Australian Consumer Law guarantees. However, subject to the Australian Consumer Law and any rights consumers have in the Australian Consumer Law, you may be able to limit your liability within your terms and conditions.
For example, it’s common to include in business terms and conditions that the business’ total liability towards a customer will not exceed the price paid for the purchase of products.
As an employer, understand your essential employment obligations with this free LegalVision factsheet.
Key Takeaways
Your business terms and conditions reduce the possibility of disputes arising with your customers, so it’s important to get them right. Your terms should clearly outline the scope of the relationship, payment, delivery, disclaimers and liabilities.
If you need help drafting your business 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 document is a legally binding document which sets out the terms around your provision of goods and/or services to your customers. Your terms and conditions should be read and accepted by your customers before they make payment.
You can avoid disputes with your customers by having a clear and easy-to-understand terms and conditions document which sets out disclaimers, key terms such as the scope of the services, and payment and delivery arrangements.
If you sell goods or services to consumers in NSW, your terms and conditions should prominently display any substantially prejudicial terms, such as through a pop-up, or by including a summary of the substantially prejudicial terms at the top of your terms and conditions.
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