What to Include in Terms & Conditions
Terms and Conditions are legally binding rules that outline the relationship between your business and its customers. These agreements set clear expectations and guidelines for how customers should use your products or services.
If you’re wondering where to start when creating your Terms and Conditions, we’ve put together a simple but detailed guide to help.
Read on to discover what Terms and Conditions are, whether you legally need them, the benefits of having them, and the important clauses they should include. We will also take you through how to get users to agree to them.
What’s a Terms and Conditions?
A Terms and Conditions Agreement outlines the rules for using your products or services. It essentially forms a contract between your business and customers. The main goal is to protect your business by setting clear guidelines, preventing misunderstandings, and providing a reference for resolving disputes.
Do You Legally Need Terms and Conditions?
A Terms and Conditions agreement is not legally required, but having one is highly recommended. It provides significant legal protection for your business by clearly outlining the rules and expectations for using your services.
Without Terms and Conditions, you risk misunderstandings and disputes with customers, which can lead to legal issues. So, adding them to your website is a smart move to safeguard your business.
What are the Benefits of Having Terms and Conditions?
Having a Terms and Conditions agreement clearly displayed on your website delivers the following benefits:
- Legal protection
- Clarity and Transparency
- Intellectual Property protection
- Builds customer trust
Legal Protection
Defining the terms of service in your Terms and Conditions can significantly limit your liability and provide a legal framework for resolving disputes.
For example, if a customer misuses your product and tries to claim damages, your Terms and Conditions can outline the limits of your responsibility, protecting you from unwarranted claims.
Clearly stating what is and isn’t allowed helps establish boundaries, making it easier to address and resolve legal issues if they arise. This can save your business from costly legal battles and ensure that disputes are settled based on predefined terms.
Keep in mind that for your Terms and Conditions to be legally binding, they need to be clear, easy to find, and the customer or client must have accepted them.
Clarity and Transparency
A Terms and Conditions agreement clearly outlines the rules and expectations for using your products or services, promoting clarity and transparency.
Say you run an e-commerce site, your Terms and Conditions can specify the Returns Policy, payment terms, and shipping details. This transparency helps prevent misunderstandings between you and your customers, leading to better customer relationships.
When customers know exactly what to expect, it reduces confusion and frustration, improving their overall experience with your business.
Intellectual Property Protection
Your Terms and Conditions can specify how your Intellectual Property, such as logos, content, and trademarks, can be used.
For example, if you own a blog, your Terms and Conditions can state that the content cannot be reproduced or used without your permission. This helps protect your valuable assets from unauthorized use, ensuring that your Intellectual Property remains secure.
By clearly outlining these protections it safeguards your business’s creative and brand assets.
Building Trust
Customers appreciate knowing the terms upfront. A well-written Terms and Conditions can boost your business’s credibility by showing that you operate professionally and transparently.
A clear and comprehensive Terms and Conditions on your website can reassure potential customers that you are a legitimate and trustworthy business. This transparency fosters trust, encouraging customers to purchase your products or services with confidence.
Creating a Safe, Respectful Environment for Users
Outlining acceptable and unacceptable behaviors in your Terms and Conditions can create a safer and more respectful environment for all users. This is particularly important for online platforms and communities, where interactions among users are frequent and diverse.
For example, if you run a social media platform or a forum, your Terms and Conditions can specify rules against harassment, hate speech, and other inappropriate behaviors. Clearly defining these guidelines helps set the tone for the community and ensures that everyone understands the expected standards of conduct.
Having these guidelines also lets you act when violations occur. You can outline the consequences of breaking the rules, such as temporary suspension or permanent banning from the platform. This not only deters bad behavior but also reassures well-behaved users that their safety and comfort are priorities.
What Clauses Should a Terms and Conditions Have?
A well-drafted Terms and Conditions agreement should include several key clauses to protect your business and set clear expectations for your customers.
Let’s explore some of the most important clauses to include:
Limitation of Liability Clause
The Limitation of Liability clause helps protect your business against legal claims. It outlines the extent to which your business can be held liable for issues that may arise during the use of your products or services.
This can limit your financial responsibility for damages and clarify that certain types of damages, such as indirect or consequential losses, are not covered.
There are several ways you can set out this clause in your Terms and Conditions. Chartered Certified Accountants, Green Accountancy, has chosen to split its Limitations of Liability into several sections. The first introduces the clause:
green-accountancy-terms-conditions-limitation-liability-clause
Green Accountancy Terms and Conditions Limitation of Liability clause
The company then goes on to address different areas of Liability like so:
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Green Accountancy Terms and Conditions Exclusion of Liability clause
You can also choose to simply combine your Limitations of Liability clause into one, like Global Retailer Corporation, Walmart:
walmart-terms-limitation-liability-clause
Walmart Terms limitation of liability clause
Restrictions of Use Clause
The Restrictions of Use clause sets out what users can and cannot do with your products or services.
This might include prohibiting illegal activities, unauthorized commercial use, or actions that could harm your business or other users. By clearly defining these restrictions, you help ensure that users understand their boundaries and prevent misuse of your products or services.
Popular Social Media giant, Instagram, has a clear Restrictions of Use clause. It first lays out who can use the platform:
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Instagram Terms Who can use clause
Next, it clearly shows how the platform cannot be used:
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Instagram Terms How you cannot use clause
Payments and Billing
A Payments and Billing clause explains how payments are to be made, the billing process, and any related terms. This includes details on pricing, payment methods, billing cycles, late fees, and refund policies.
Clear payment terms help avoid misunderstandings and ensure that both parties know their financial obligations.
Graphic design platform, Canva, includes an extensive Billing clause in its Terms, giving its customers a clear idea of what they will be billed for. It has also included useful boxes to clearly outline the main points in certain sections:
canva-terms-use-billing-clause
Canva Terms of Use Billing clause
If you own an e-commerce store, your Payments and Pricing clause may look more like this Policy provided on the Staples UK website:
staples-uk-terms-price-payment-clause
Staples UK Terms Price and Payment clause
As you can see, it covers itself in case prices are listed incorrectly on the website and in the event prices change. The company also clearly states how customers can pay for their orders.
Privacy Policies
To comply with privacy laws, businesses are required to have a Privacy Policy. While it's good practice to have a separate page on your website dedicated to privacy, it should also be included in your Terms and Conditions.
The Privacy Policy clause informs users about what kind of data you collect, how it is used, stored, and protected. It should detail the types of personal information you gather, such as names, email addresses, and payment details, alongside the purposes for which this data is collected.
Your Privacy Policy should also explain how you handle and protect user data. This includes the security measures you have in place to safeguard information, how long data is retained, and any circumstances under which data might be shared with third parties. It is also important to outline users' rights regarding their personal information, such as the right to access, correct, or delete their data.
You can see how this clause fits into your Terms and Conditions with this example from Global marketplace Etsy:
etsy-terms-privacy-clause
Etsy Terms Privacy clause
As shown in the example above, Etsy has included a clear link to its more extensive privacy notice. It has also set out exactly what information it collects and processes.
By including a comprehensive Privacy Policy in your Terms and Conditions, you not only comply with legal requirements, if necessary, but also build trust with your customers.
Termination Clause
The Termination clause outlines the conditions under which either party can terminate the agreement. This may include breach of terms, non-payment, or other significant issues.
It should also explain the process for termination and any consequences that follow, such as loss of access to services or data deletion.
Here is an example of YouTube’s Termination clause:
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YouTube Terms Termination clause
It clearly lays out how users can terminate their account by themselves, as well as the circumstances the platform may terminate a user account.
There is also a clear link to an appeal form if the user feels their account has been terminated in error.
How Do You Display Terms and Conditions?
Your Terms and Conditions need to be easy to find and displayed on each page of your website. Most businesses add a link to their Terms in the footer of their website.
Here is an example found on the popular streaming platform, Discord:
discord-site-footer-terms-link
Discord site footer terms link
As well as including the link on the footer, you should also include it in your account sign up form if applicable.
You can see TrustPilot includes a link to its Terms and Conditions during sign up like so:
trustpilot-create-account-terms-link
TrustPilot Create Account Terms link
The above example, while clearly providing a link to the Terms and Conditions, does not make them enforceable. That is, it doesn’t ask the user to accept the Terms and Conditions, which is vital if you want them to be legally binding.
We will explain more about this, as well as how to get users to agree to your Terms and Conditions in the next section of this guide.
Links to your Terms and Conditions can also be displayed in various other locations to improve accessibility. These include FAQ pages, User Forums and Community Sections, contact forms, checkout pages, and the About section on your website.
Here is an example of how Apple included its Terms and Conditions in the FAQ of its AppleCare warranty service:
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AppleCare FAQ excerpt
Remember, your Terms and Conditions agreement is only effective if users can find it and are required to accept it. Make sure it is prominently displayed and easily accessible to protect your business and ensure users are aware of your terms.
How Do You Get Users to Agree to Terms and Conditions?
To ensure that users agree to your Terms and Conditions, it’s essential to include an "agree" checkbox. This is known as the Clickwrap method.
The Clickwrap method requires active consent from the user before they continue to sign up for, purchase, or use your services.
Here is an example of how Video Game Digital Distributor, Steam, utilizes the Clickwrap method in its sign-up process:
steam-create-account-form
Steam create account form
Before they can complete the registration process, users are required to check a box indicating that they have read and agree to the Terms and Conditions.
Conclusion
Understanding and implementing a comprehensive Terms and Conditions agreement is beneficial for any business. It sets clear guidelines for both your business and your customers, helping to prevent misunderstandings and disputes.
Remember, to be legally binding you need to make sure your Terms and Conditions are:
- Clear and concise
- Easy to find
- Compulsory for users