Sites or apps often overlook the importance of the terms & conditions (T&C). As a legally binding agreement, the terms & conditions document is like any other contract: among other purposes, it determines the rights and obligations of each party and the allocation and disclaimer of risk.
In principle, you're free to run your business without any T&C, but the consequence will be that to all contracts and legal relationships you establish with your customers, statutory law will be applicable. Statutory law, and in particular consumer law, strongly protects consumers: having T&Cs allows you to derogate - within the limits of what is legally possible - in your favour.
Example: If you want your customers to bear the cost of return shippings whenever they decide to withdraw from contracts, you have to inform them beforehand. This usually happens within the T&C applicable to online purchases. If you fail to inform them, you're obliged to bear the costs yourself.
Mandatory and non-mandatory information
While you're not obliged to adopt T&Cs, European regulations require you to provide a whole set of mandatory information. Not having such information on your online-shop or app may result in sanctions, actions brought by consumers' associations or competitors, unfavourable treatment of your contractual position like mentioned in the example before.
Some legislation information
Informational duties are spread in various pieces of legislation, such as the Electronic Commerce (EC Directive) Regulations 2002, the Consumer Contracts Regulations (see more here
) and some European regulations, like the quite recent 2013/524/UE, introducing the Online Dispute Resolution platform for consumers.
Most mandatory information must be provided before the user is bound to a contractual agreement. There are, however, also informational duties after the purchase has been completed (e.g. the obligation to confirm to the user without undue delay that his order has been correctly placed and received).
How to write the terms & conditions document
It is not possible to provide a complete overview of all information that has to be provided, since it partly depends very much on the kind of business you're running.
However, there are some common elements that T&Cs should always contain:
- Identification of the business (name, address), give your VAT number (if your business is registered for VAT);
- Description of the service that your site/app provides: be precise! You don't want customers to claim they were expecting a totally different service!
- When and at which cost is the stuff going to be delivered? Which territories are you serving?
- How can customers pay? Are there any handling fees? You have to provide at least one common and free-of-charge means of payment.
- In which language is the contract being closed? Recently Whatsapp got into trouble in Germany because in spite of providing all its service in German, the T&Cs were only available in English. So: inform your customers beforehand in which language the service and the contract are available.
- Is an after-sales service available?
- Inform about available (legal) warranties.
- Withdrawal right: under EU and therefore UK law, consumers have a statutory right to withdraw from contracts closed online within 14 days without stating any reason. This means that, as long as they respect the term, your customers are free to send back stuff just because they don't like it or found it cheaper somewhere else.
- On top of that, you have to inform them precisely about the withdrawal right they enjoy, about the ways to exert it, about whether they have to bear return costs or not. You're not allowed to retain part of the price payed in case of withdrawal: the customer is entitled to a full refund.
- Remember: if you don't inform your customer of their 14-day withdrawal right, the withdrawal period will extend to 14 days + 12 months.
- The button customers need to click in order to place a binding order, needs to clear. It is important that the chosen expression clearly conveys that: 1) customers are getting legally bound 2) to a contract that requires them to pay. So, for instance, a button saying “confirm order” would probably not be considered clear enough.
Publishing the terms & conditions
Having them is not enough: you have to place your T&Cs in a way, that customers are virtually forced to be aware of them. If you fail to do so, you run the risk that your T&Cs won't be considered part of the contract closed with customers. Therefore, the most common and safe solution is to place a check-box + link to the T&Cs right above the button customers have to click in order to place an order: if the box is not checked, the button stays inactive.
T&Cs must be available in a way that customers can download, save and print them.