Your business terms and conditions reduce misunderstandings between you and your customers. They’ll 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 terms and conditions agreement is a legally binding document. You’ll typically ask customers to accept the terms before they make 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?
Your business terms and conditions will define the scope of the relationship with your clients. If you don’t limit the scope of your business relationship, you won’t know when the relationship can be terminated. Therefore, your terms and conditions should include:
- the products you’ll provide;
- when you’ll provide the products; and
- how you’ll provide the products.
If your business terms and conditions lack these details, you may have to rely on emails or conversations with your customers about what, when and how you’ll 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.
If you do not provide clear payment terms to your customers, how will they know what type of payment you accept, or 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’ll deliver. You have not purchased the materials to make the surfboard because you need 20% of the product payment up front. 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.
It is important to clarify how and when your products or services will be delivered, who pays the costs of delivery and what happens if the goods or services are not delivered. Failing to do so can potentially create:
- delay disputes;
- disputes about unexpected delivery costs and who should pay for the costs; and
- product damage disputes.
Your business terms and conditions should also include disclaimers about the products you sell. Disputes can arise if a customer starts thinking your product is not suitable 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. They may want to dispute the authenticity of your medical product because it did not fix their problem. This would have been avoided if your terms and conditions include a disclaimer about seeking medical advice before purchasing your medical products.
Australian Consumer Law and Limited Liabilities
Your business terms and conditions must comply with the Australian Consumer Law guarantees. However, your terms and conditions can expressly limit your liability within the scope of the law, including having a monetary cap on your potential liability.
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.
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 assistance with drafting or reviewing your business terms and conditions, call LegalVision’s contract lawyers on 1300 544 755 or fill out the form on this page.
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