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ARTICLE Business TipsApril 8, 2015

Why you need terms and conditions for your e-commerce site

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Terms and conditions are a must for every online business. Here, LegalVision’s Ursula Hogben outlines why online businesses need this legal agreement, how terms and conditions can help protect your business and how you can go about putting them together.

Whether your e-commerce business is selling goods or services, it’s essential that you include term and conditions on your website. They form a legal agreement between you and your customer and help safeguard your business in many ways.

What should terms and conditions cover?

There are standard areas of terms and conditions that apply to all types of businesses. These define what a customer is buying and when and how it will be delivered or provided. In addition, they safeguard your intellectual property by stating your ownership, and they confirm your compliance to consumer law by stating, for example, when a consumer must return goods untouched for refund or exchange, or whether you provide additional warranties.

Terms and conditions also set out requirements that your customer must meet, such as payment terms, and they can limit your liability, including with disclaimers. “At some point, it’s a judgement call but, from a legal perspective, it’s safer to put in explanations and disclaimers on what you can and can’t do,” explains Ursula Hogben, General Counsel of LegalVision. “Sometimes it’s the most obvious things, such as ‘this beach toy is not a life-saving device’.” 

Why do you need them?

There are five key reasons to include terms and conditions on your website:

1. If they’re not visible, they don’t apply

For your terms and conditions to be binding, a customer must be able to read and accept them before they make a purchase. “It’s actually not a legal contract if you buy something from me and then afterwards I send you the terms and conditions,” explains Hogben. For this reason, many e-commerce sites include terms and conditions on their purchase page and require consumers to click on a box to acknowledge them.

2. Terms and conditions protect your business

Consumer law protects consumers but terms and conditions are all about safeguarding your business. “Your business terms and conditions are to clarify how things work or to protect you,” says Hogben. “They can really make a difference between getting paid or not getting paid or having a dispute or not.”

3. They extend your legal rights

Hogben says that e-commerce businesses are often more vulnerable to intellectual property theft – whether it be your images, product descriptions or the look and feel of your website. “There is a general law that protects your intellectual property (IP),” she explains, “but if you add IP protection to your website, it gives you contractual rights. It means you have more rights if things go wrong.”

4. They refer back to your website

Well-written terms and conditions should refer back to the products and services on your website to avoid the need for regular updates. “For example, we wouldn’t put in the terms and conditions that delivery is $10,” says Hogben. “We would say that the cost of delivery is as per on the delivery page of the website. This way, it’s referencing what’s happening in the front-end of your website.” If terms and conditions are clearly written, adds Hogben, they will rarely need to be rewritten –“unless your business or the law changes”. 

5. They define obligations

In addition, terms and conditions protect you in case your customer fails to meet your provisions. “For example, if I’m creating a logo for you, I should have a clause that says when you need to give me your feedback,” says Hogben. “If I’ve committed to giving you a final logo in a month and I’ve sent you a first draft and you never get back to me, I’ve potentially breached the contract if I haven’t given you the final logo in a month. So, it’s quite important that the other side’s obligations are made clear.” 

Drawing up your terms and conditions

Having established that terms and conditions are essential on an e-commerce website, how should you set them out?

While there are some online generators that can provide generic terms and conditions, it’s important to remember that one size does not fit all. A good legal firm will provide questionnaires to help you clearly define your business, including what you offer and your industry, which then helps them to write terms and conditions specific to your business needs.

“They [terms and conditions] are a legal document,” says Hogben. “If your terms and conditions are clear, you can recover money and stop disputes – this is one area that’s worth spending money on.”

Did you know?

Running an online business requires you to understand many aspects of the law. We’ve teamed up with law firm LegalVision to help provide you with a solution for your legal documents needs. 

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