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This chapter is an extract from LegalVision’s Online Business Manual. Download the full guide here.

Business Terms and Conditions

Business Terms and Conditions protect your online business and ensure your customers understand what product or service you are selling. Your business terms and conditions will be one of your most important contracts and it will cover:

  • how your customers or clients will pay for your product or service;
  • the refund, repair or replacement process;
  • how you will deliver the product or service;
  • information and disclaimers about the product or service; and
  • how parties will resolve a dispute.

Your business terms and conditions will differ depending on the type of business you run. If you sell goods online, like most e-commerce businesses, you’ll need a set of sale terms and conditions for your customers. This would generally be provided online through a clickwrap agreement (i.e. the customer must click-to-agree before proceeding to purchase).

If you provide services, you’ll need a client agreement or service terms which set out what you will and won’t do for the customer as part of any engagement.

If your business is a marketplace, you’ll need marketplace terms and conditions which set out your relationship with each side of the marketplace (i.e. buyers and sellers) as well as the relationship between the two sides.

Australian Consumer Law (ACL)

Consumers often purchase goods that, for one reason or another, may be unsatisfactory. The Australian Consumer Law (ACL) contains a number of consumer guarantees, which are mandatory promises that businesses automatically make to
consumers, regardless of any terms of sale or warranties the business provides. The ACL also includes a clear set of rules outlining what a business is required to do if it falls short of the consumer guarantees.

The key consumer guarantees that apply to retailers include:

  • the goods or services are of acceptable quality;
  • the goods or services match any description provided; and
  • the goods or services match the sample or demo model.

A retailer must provide a consumer with a remedy or solution if the goods or services don’t meet these guarantees.

Types of Business Terms and Conditions

Business Type Legal Document
Service Business Client Agreement
Shop/E-Commerce Store Sales Terms and Conditions
Marketplace Marketplace Terms and Conditions

Warning:

Under the ACL, you are considered to be the ‘manufacturer’ if the real manufacturer is located overseas without an Australian office. This means that you must give a remedy to a customer, even if the issue seems to be a manufacturing fault.

The type of solution a retailer must provide to a customer depends on the severity of the problem with the product – and whether or not the problem is a “major failure”.

A “major failure” includes when the product:

  • has a defect that would have prevented someone from purchasing it;
  • is dangerous;
  • doesn’t match the product description; or
  • lacks the functionality it should have.

If the problem with the product is something major, a consumer has a right to ask for either a replacement or a refund. Whereas if the problem is minor enough that the retailer can fix it within a reasonable time (for example, a missing cable or power adapter), the retailer may choose to repair, replace or refund the item.

A business cannot exclude, restrict or modify the consumer guarantees when they sell goods or services to the public.

Quick Tip

Make sure your front-line sales team, whether they are handling enquiries over the phone or through online chats, understand the basics of the consumer law and consumer rights.

Refund Policies

A business is not obligated to offer a refund to a consumer if they change their mind. But just because retailers are not legally required to offer change-of-mind returns, doesn’t mean that they can’t choose to do so. Outside of the statutory requirements, retailers can create their own return policies as long as they do not breach or override the consumer guarantees. A number of major retailers offer change-of-mind returns within a specific time period, provided the item is still in a saleable condition and the consumer provides a proof of purchase.

How long does a consumer have to return a product?

A consumer cannot demand a refund if the problem with the product is minor and the retailer can repair the product within a reasonable time. A retailer may take into account the following factors when determining what’s ‘reasonable’:

  • the type of product;
  • how a consumer would use the product;
  • price paid for the product;
  • length of time a consumer would
  • use the product; and
  • how often a consumer would use the product before a problem appears.

If you’re unsure whether you’ve breached the Australian Consumer Law, or you need to understand more about the importance of your business terms and conditions, you can contact LegalVision’s online business lawyers by calling 1300 544 755 or filling out the form on this page.

The Ultimate Guide to Starting an Online Business

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.

Download Now
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