Many businesses find that selling their products online is an effective way of reaching a wide range of customers. Bricks and mortar stores are moving online and new retailers are going straight to the internet to sell their wares. When you sell your products online, your customers will need to read and accept your sales terms and conditions before making a purchase. This is one of three documents you will need on your online store, alongside your website terms of use and a privacy policy. Your terms and conditions should:

  • contain clear clauses that protect you in case of a problem down the track; and 
  • explain to the customer what they must agree to before making a purchase. 

Customers should only make a purchase from your online store if they understand their rights and responsibilities. There are risks involved in dealing with customers, such as non-payment, liability and faulty goods. Your terms and conditions can help to manage these risks.

In this article, we outline what you should include in your terms and conditions for your online store.

Registration

Some online businesses require customers to create an account before making a purchase, whereas others are happy for customers to purchase products as a guest. At this point, your terms and conditions should reference your privacy policy and state that you collect and handle information in accordance with your privacy policy. 

Payment 

Your terms and conditions should set out customers’ options for paying for products. You need to ensure you receive payment for your wares. Many businesses take payment before dispatching their products. This is the safest method for any business, as you do not need to provide anything until you have received payment. Other businesses also use a subscription model (e.g. a magazine subscription). In this model, customers pay in set billing cycles. 

If you offer payment gateways such as Stripe or Paypal, or pay-later methods such as Afterpay, your terms should reference this fact. You should also let customers know that the third party’s terms and conditions will apply as well. 

Orders and Delivery

It is important to set out the process for ordering products, including what happens if products are not available when a customer tries to purchase them. 

For example, you could offer to:

  • put products on backorder; or
  • cancel the order altogether. 

Delivery and shipping are ongoing risks for any online transaction. As such, you should include them in your terms and conditions. The delivery and shipping clauses need to set out:

  • how soon after a customer places an order you will dispatch the products; 
  • where customers can find delivery costs (usually, these costs are available on your site); 
  • that you cannot guarantee the quality of the delivery services of any third party service providers;
  • when legal ownership of the product transfers from you to your customer. 

Returns

Your terms and conditions need to specify the circumstances in which you offer exchanges and refunds. Some businesses choose to offer exchanges or refunds for change of mind. Others choose only to provide these in certain circumstances (e.g. only if the products are unopened or unused). 

Australian Consumer Law (ACL) and Warranties 

Under the Australian Consumer Law (ACL), as a seller of goods, certain consumer guarantees automatically apply to your goods. These guarantees apply in addition to any other promises or warranties you make about your products. According to the ACL, the goods you sell must be: 

  • of acceptable quality; 
  • fit for purpose; 
  • free from defects; 
  • safe; and 
  • durable. 

You cannot include a disclaimer in your terms and conditions stating that your products may not be of an acceptable quality. If your goods do not meet these consumer guarantees, you will need to provide a repair, replacement or refund (depending on the circumstances).  

If you provide any additional promises about your goods (e.g. that the fishing rods you sell will not break for at least 10 years), you need to include certain mandatory wording in your terms and conditions. 

Limitations to Your Liability

While you do take on some responsibility as a seller of goods, you can limit or exclude your liability for circumstances outside your control. You should clearly set out these limitations and exclusions within your terms and conditions. You might also include disclaimers, such as for:

  • information or material on your website, or instruction sheets that come with your products; and
  • ingredients in your products (e.g. ingredients in your new skincare line); or
  • risky products that you sell (e.g. products with contain small parts that may be a choking risk for children).

Your disclaimer should advise customers that:

  • before purchasing your products, they should do their own research as to whether your products are appropriate for them; and 
  • you do not provide any specific advice or diagnoses when advertising and selling your products. 

Key Takeaways 

It is important to have a strong set of terms and conditions for your online business. Without these terms, the ACL alone will govern your relationship with your customers. The ACL includes significantly more protections for the customer than for the business that is selling the product. To ensure that you are fully protecting your legal rights, you should ask a professional to draft the terms and conditions for your online store. LegalVision’s lawyers have plenty of experience in working with online businesses. If you have any questions, contact LegalVision’s e-commerce lawyers on 1300 544 755 or fill out the form on this page.

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.

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