E-commerce terms and conditions
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| Introduction |
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| Your “Ecommerce Terms and Conditions” document is the contract between you and your customer for your supply of goods or services. The same document may also be called “Terms”, “Terms of sale”, “Sale Contract”, Business Terms” and many other variations. Where it is referred to in these terms it is generally offered to clients or customer on a “take-it-or-leave-it” basis. |
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| If your customer or client has the opportunity to negotiate and edit your propose contract document, then the resultant document is likely to be referred to as a consultancy agreement or simply an agreement or a sales agreement. |
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| Too many business managers “terms and conditions” presents an image of incomprehensible legal jargon comprising a document of awe inspiring length or incorporated into a box so small you can read only six words at a time. As we explain below, such terms are unlikely to be valid in English Court and may incur the wrath of your local trading standards officer. |
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| In this page, we shall use “client” rather than “customer” for convenience, but all we say applies equally to a business selling goods as to one selling services. |
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| All these names cover a document that regulates your business relationship. You will see below how to choose which is best for you. |
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| Their purpose is: |
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- To set down what you have agreed; or
- Present the inflexible terms under which you will accept business; including;
- Defining the contract;
- Defining the business procedures;
- Protection of your business and your rights;
- Limitation of your liability;
- Other relevant matters.
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| Net Lawman provides several variations for you to use as a template for your own version. What is more, we will edit your proposals to make sure they are legally binding, have the meaning you intend and reflect the law in the simplest way. |
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| A well-drawn Terms and Conditions document should include the following provisions. |
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| Definition of basis or subject matter of the contract. |
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| Make clear what you are selling. Either describes it in detail or by reference to another document, or to your web site, but makes it clear. It is perfectly valid to use general words, such as “services set out in our web site” or “the products listed in our catalogue”, if the Terms and Conditions are to cover various situations, |
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| The Price |
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| This should include all variations and circumstances as well as provisions for increase. Because price information is variable from time to time, it is good practice to put it in a schedule or refer to it as in “our price list from time to time”, rather than trying to list everything in the body of the Terms and Conditions. A reference to “the prices charged on our web site” is satisfactory here too. |
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| Price increases and changes |
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| Set out the Terms and Conditions under which you may change the price and how you will impart information about the change and whether it will affect this contract. If you sell a service repeatedly, such as a dating service or web hosting, you will need provision for periodic price increases. This should be covered either by splitting the continuous contract into a series of short, fixed price contracts, or by providing for a periodic increase. |
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| It will be appropriate for your Terms and Conditions to set out the circumstances of the increase and possibly to give notice of it in a way which enables the client to terminate if he does not wish to accept the new price. You may not increase an agreed price unilaterally, any more than your client is able unilaterally to reduce the price. |
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| Method and timing of payment acceptable to you |
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| Your Terms and Conditions will include late payment provisions. In cases where an ongoing service, such as web hosting, is provided, these should include default and penalty provisions. |
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| Defining the services procedures |
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| Every business is different in this. There is a fine line between including procedural matters you may change in future and those that will remain unchanged. The former are best on a web page; the later in your ‘Terms and Conditions’. But avoid cluttering your ‘Terms and Conditions’ with half promises and sales talk such as “We will endeavour to provide service 24 hours a day”. Remember that the main purpose of the document is to enhance and protect your interest, not promote your business or protect your customer. |
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| Provisions relating to carriage, delivery, risk and insurance |
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| Every business selling goods has its own Terms and Conditions to cover this area of activity. Don’t generalise. The important thing is to decide what your policy is and include it in the document. |
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| What happens while the contract runs? |
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| This may not be relevant for the sale of goods, but it may be important in a sale of service, for example those of a consultant. These provisions would include reporting, testing, staff to be used and any number of other practical points. These provisions set out the “engine” of the deal and will vary greatly from one business to another. |
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| Termination provisions |
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| Some contracts are effectively terminated almost as they are made, for instance a simple sale of goods for cash. Other contracts, such as a contract for legal services, might be on-going and renewed from time to time. How long will your contract last? Is this clear from your sales material and web site? What will trigger the termination? What will happen to services not rendered or to goods not yet delivered? What penalties will you seek for early termination? How will you prove your losses? If you are creating a “product” like software, to whom will it belong if the contract is terminated early? |
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| Limitation of your liability |
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| How much liability will you accept for your own failure to provide the goods or services, if any? What if the goods are defective? What defect constitutes a reason for the goods to be returned? What if your services are inadequate? How is “inadequate” defined? Are your provisions valid in law? What if they could be partly void? |
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| Protecting your business from your client |
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| This is a big area usually covered in a number of separate provisions. They would include confidentiality clause, provisions about ownership of intellectual property and unexpected action by a third party. Intellectual property is particularly important in the context of an Internet business. For example, we would guess that 95% of the value of Google is in its name and business, leaving only 5% for its allegedly vast array of hardware and its office organisation. |
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| Indemnity by your client / customer |
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| An indemnity is usually a statement that sets out the circumstances in which they may be liable to re-pay you for your losses and expenses. |
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| Data protection and privacy |
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| The Data Protection Act imposes strict duties. It may be necessary to tell clients / customers how you intend to comply, or to comply by telling them what data you hold and why. |
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| Assignment of the benefit of the agreement |
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| What happens if one party wants to sell its business with the benefit of its contract with you? Can it do so? How do you define a sale of the business anyway? These points rarely arise, but when they do, they can be enormously important. |
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| Dispute resolution |
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| Of course it is sensible to set out in advance how you intend to resolve a problem between you. Net Lawman always uses “mediation before arbitration or litigation”. As you will read elsewhere on this web site, we are not in favour of arbitration at any price, but mediation is under-used in the UK and has gigantic benefits in savings of time, money and stress. |
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| Consider this too: |
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- In English law consumers enjoy extensive protection not given to a business. If you sell to consumers, you must comply with ‘The Consumer Protection (Distance Selling) Regulations 2000’. If you fail to do so, not only are you at risk of being closed down by your local trading standards officer, but you may be subject to legal action by your buyer in respect of which you’re Terms and Conditions may be no defence;
- Avoid copying or using a Terms and Conditions document from another company, particularly a US company. The US has 52 jurisdictions. In each certain definitions differ from other states. That means the best chance to cover all eventualities in all states is to include all the defined terms. So US drawn Terms and Conditions are far “wordier” than we need for the three interlocking jurisdictions in the UK;
- Apart from the obvious point that Terms and Conditions drawn to be appropriate in the state of Utah may be inappropriate in the county of Leicestershire, many of the terms will not be appropriate to your business, while many elements you particularly need will be absent from the US set. Net Lawman Terms and Conditions documents are designed to act as an “aide memoirs” as well as a template, to prompt you to make any necessary changes to suit your own business;
- Throughout the “Western” World, one of the foundation blocks of contract law is that the parties agree. If they are not of the same mind, a court will either say the contract is void, or partly void, or it will write in the Terms and Conditions which are reasonable in all the circumstances;
It follows from this that when you come to enforce your Terms and Conditions you will have to be able to show the court that the other side agreed to them. Bluntly, the practice of many sites of presenting them in a small box where you cannot read the document, nor print it out, would probably render those terms void in an English court. If your contract party has not been given a fair opportunity to read your Terms and Conditions, how can you claim he has accepted them? To say, “Well, he clicked the button”, may not be enough;
- If you want to pin your client / customer with certain acceptance, you should go further still: set up your web form so that your client / customer cannot buy without ticking a box that specifically confirms “I have read your terms and conditions. I agree that they are reasonable and I accept them”
One further consequence of the requirement that the parties to a contract have agreed all the Terms and Conditions, is that the contract Terms and Conditions must have been agreed before the contract is made. Although this is obvious, many web sites are set up in a way that creates a contract before payment is made, but presents the Terms and Conditions only at the pay point. This is too late;
- One corollary of trading World wide is that it may be sensible to adopt harsh and strict Terms and Conditions on the basis that they provide a deterrent to trouble makers. Your clients in Hong Kong or Brazil are unlikely to know much about English law, but if your Terms and Conditions make out that the World will collapse around them if they misbehave, you may feel that disputes are less likely. Net Lawman does not endorse nor use this practice unless specifically instructed, but we do recognise that it may be helpful in some circumstances.
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| You will also need other documents to protect your business. Consider these: |
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- Acceptable use policy;
- Affiliate terms;
- Special partner” referral agreement;
- Web site disclaimer;
- Privacy policy.
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| If you are a buyer, consider whether you should accept the Terms and Conditions put to you by the seller. We are all presented with standard terms in every day Internet business. You do not have to accept them. The issue is a question of comparative economic power. If there is some term you would like to change, why not put it to your supplier? It is unlikely that a large business will agree to a change in its Terms and Conditions for a $200 dollar purchase, but what if your business is at a value that really matters to them? For every business, there is a figure at which they would re-consider anything! |
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| We are paid up front, so why does it matter? |
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| Reply: “Quite simply, because your business cannot afford the loss of time and money and you cannot afford the personal stress which litigation and disputes cause. The fact that you have the money will not protect you from a claim. |
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