Terms and conditions agreements are legally binding. They can provide clarity and certainty for both you and your customers. If you run an online store to sell your products, you need to have terms and conditions that clearly set out:
- what customers can expect from your products;
- how your delivery and payment processes work; and
- what they can do in case something goes wrong.
Properly drafted terms and conditions can help you address customers’ biggest concerns when purchasing online. This article will discuss the key terms to include in your terms and conditions.
How Can Customers Accept the Conditions?
You do not need an actual signature from your customers for them to accept your terms and conditions. Most online businesses at checkout will have a separate ‘checkbox’ which allows customers to accept or reject your terms and conditions. Here, you can include a hyperlink to your terms and conditions. Once accepted, you can choose to have these terms and conditions apply to all future transactions with the customer. For example, they may have an existing account with you and will not need to check the box for every purchase.
When building your website, you should ask your developer to include this checkbox and hyperlink at the point of checkout. Alternatively, if you are using an e-commerce site to host your store, make sure you have the option for terms and conditions to be selected.
Payment
Payment terms should include:
- when payment is due;
- acceptable methods of payment;
- any conditions on payments; and
- discounts that may be available to customers.
In the past, upfront payment via credit card was the only option for customers looking to purchase products online. Now, however, customers can use a host of third-party providers to pay you.
These include:
- Paypal;
- Afterpay; and
- Stripe.
These third parties will provide guidance on how you can incorporate information about these businesses in your terms and conditions.
Additionally, if you create custom products for your customers, you may also consider taking an upfront deposit. This will ensure your expenses are covered, even if the client does not follow through on their purchase.
Continue reading this article below the formDelivery
Delivery issues can be very frustrating for customers and result in negative reviews and refund requests. You can build a great reputation for your business if you are able to arrange fast and efficient delivery. Your terms and conditions should clearly indicate what your clients should expect in the delivery process.
You should outline:
- the regions you deliver to;
- whether you use a third-party delivery company;
- your delivery timelines;
- who is responsible for damage to the products during transit; and
- when ownership of the products passes to the customers.
There is no one correct way to arrange your delivery process. However, ensuring you set reasonable expectations is crucial to a positive customer experience. Furthermore, you should clearly set out the procedure customers must follow if they change their order after payment. If the customer accidentally inputs the incorrect address or needs to add something to their order, you should outline whether they have a window of time to edit these details before you dispatch the order.
A good set of terms and conditions will limit your legal responsibility for issues arising after delivery. For example, suppose a customer consents to the delivery driver leaving the parcel at their front door. If the parcel goes missing, your business should not be responsible for replacing it.
Refunds and Returns
Damaged or Defective Products
The Australian Consumer Law (ACL) contains several consumer rights and guarantees that you cannot exclude in your terms and conditions. This means that when customers purchase from you, they have automatic guarantees that your goods will work and do what the customer reasonably asked for. Your terms and conditions must clearly state that the customer has rights under the ACL if your goods do not meet the consumer guarantees. This includes rights to a:
- repair;
- replacement; or
- refund.
One of the key consumer guarantees to keep in mind is that the goods must be of acceptable quality. For example, if you sell shoes and the stitching comes apart the first time your customer wears them, you will need to repair, replace, or provide a refund for the shoes. Your goods must also be fit for a particular purpose.
For example, if a customer specifically tells you they need a watch they can wear while diving, and the watch you sell stops working as soon as they go underwater, it is not fit for purpose. Accordingly, the customer is entitled to a repair, replacement, or refund.
Another guarantee is that your products must match the samples you provide. For example, if you sell t-shirts online, and your image on the site shows them as pink when they are red, you will need to refund or replace the t-shirt if the customer requests.
If the Customer Changes Their Mind
There is no right under the ACL for a customer to return a product if they simply change their mind. Whether you offer change-of-mind returns or not, make sure that you outline this in your terms and conditions. If you offer change-of-mind returns, you need to specify the process to obtain a refund or replacement. This process might set out the:
- customer needs to have proof of purchase;
- products have not been used, and
- the customer is responsible for the shipping costs associated with the refund.
Warranties
There are also mandatory warranties under the ACL that you must provide to customers. Some businesses will provide additional warranties that go over and above their obligations under the ACL. Once a customer purchases a product with your warranty, the promise you made becomes a customer right, enforceable under the ACL.
For example, you may provide a lifetime guarantee that the goods will be of a certain quality.
If you offer warranties, you must have specific wording in your terms and conditions that informs the consumer of these rights under the ACL. This wording is known as ‘mandatory wording’, and penalties apply if you fail to include it.
If you provide a separate warranty against defects, your terms and conditions need to be in a language that is easy to understand and must detail:
- what your warranty covers;
- how long the warranty is for; and
- what the customer needs to do to claim the warranty.
For example, the customer may need to send the product back to you with details of the defect and proof of purchase. This warranty is additional to the consumer guarantees and will not limit or replace them.
As a franchisor, you must not engage in misleading and deceptive conduct. We explain what it is and how to avoid it.
Key Takeaways
When you sell products online, your terms and conditions need to be clear to avoid future issues and misunderstandings with customers. You also have obligations under the ACL which your terms and conditions must comply with. Some of the key clauses in your terms and conditions are payment, delivery, refunds, returns and warranties.
If you need help with drafting terms and conditions for your online store, 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
No, there is no explicit law requiring terms and conditions. However, they are very helpful in protecting your business from disputes and creating clarity.
No, terms of use apply to every visitor to a website. In comparison, terms and conditions only apply to particular users, in this case, when the user is paying for your product or service.
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