Mastering Terms and Conditions: Essentials for Businesses

Terms and Conditions (“T&Cs”) govern any and all contractual obligations between two parties. They aim to provide clarity to any situations which may arise and offer legally binding assurances when accepted.

Your “T&Cs of Business” should be one of the first things considered when starting a business. Despite not being a legal requirement, T&Cs may become vital and incredibly beneficial to reassure certain roles and responsibilities. 

How to write T&Cs?

T&Cs should be tailored to each business with consideration to the unique commercial context of the industry they operate in. 

Prior to drafting the T&Cs, it is fundamental that startups familiarise themselves with the rights owed to consumers under the Consumer Rights Act 2015. A breakdown of key points for small businesses from The Consumer Rights Act 2015 can be found here. 

Listed below are the standard T&Cs requirements for a general business. These provide a useful starting point when creating your T&Cs. 

1. Definitions

Defining key terms is integral to ensure consumers understand the contractual terms that are being agreed to when signing your T&Cs. 

Definitions should be explained using clear, simple and succinct language. Any specialist terms should also be defined in layman’s terms. 

2. Customer’s right to use the site and its contents

T&Cs should provide customers with relevant legislation that details consumer rights in both a general and industry-specific context. 

For example, a company that drop-ships products will detail that customers have the right to not only purchase goods through their site but return them if they aren't suitable in any way via the website.

3. Guarantees and Warranties 

Guarantees and warranties act as promises from the business to the consumer about certain conditions. For example, the quality or reliability of a good or service. The main difference between guarantees and warranties is that guarantees are usually free of charge, whereas a warranty may require additional payment.

Guarantees and warranties may provide additional protection for customers. However, these terms are often superseded by existing legislation. For instance, a customer is ordinarily required to raise a problem with a contract within six years of entering into it (“limitation period”). However, extended guarantees may also be sold with the product, but this would be a separate provision only applicable to those who purchased this form of guarantee, such as accidental damage protection.

The purpose of this is to ensure the expected quality and standard of your product(s). Therefore, it is essential to detail the specifics of your intended promise in the T&Cs. The inclusion of both guarantees and warranties will ultimately increase consumer confidence in your business. This ensures not only retaining customers and building their loyalty but increasing its attractiveness to those who haven’t before invested in your business. 

For a further understanding of warranties and guarantees, click here. 

4. Extra Costs

For a business that trades goods or services, its T&Cs must clearly display any extra costs involved in the transaction, which may include:

• Prices of delivery;

• Implications of late payments; or

• Subscription changes. 

If your product/service may be subject to a change in price, ensure a disclaimer is included. A disclaimer aids in protecting you, as the issuer, from potential legal action that may arise on account of providing incomplete or inaccurate information.   

Including information on extra costs:

• aids in protecting your business from potential litigation; and

• fosters transparency and trust for consumers within commercial transactions. 

5.How to cancel/exit the contract

Terms for terminating the contract must be set out in your T&Cs, particularly if your business adopts a subscription-based model. Keywords such as ‘termination’ or ‘cancel’ should also be defined in the definitions section. 

  Terminating a contract

In summary, terminating a contract legally ends the contract between you and the consumer. Many businesses often require a 14-day termination period.

Rescinding a contract

Contracts can/may be rescinded if there is a material error in the contract and these meet the legal requirements for the grounds to rescind. Rescission of a contract means that the contract would be extinguished and the parties restored to the position they were in prior to signing the contract. 

6. Limitation of Liability

Within your T&Cs, it is important to include a limitation of liability clause specifying the limit on the damages that the parties will be obligated to provide/pay in the event of defaulting on the contract. If your T&Cs do not include a limitation of liability clause there is a potential risk that if you are the defaulting party you may have to pay monetary damages which in some events could be greater than the value of the contract. 

With such an important part to play when creating a contract for goods/services, it is vital that these are drafted carefully to ensure customers are paying attention to its effect when entering into this contract. 

Types of legal liability that may arise include:

• Breach of contract;

• Misrepresentation;

• Negligence; and

• Breach of intellectual property rights. 

Implications of not having T&Cs?

There are various potential risks to your start up if trading without T&C’s, most notably in regards to your liability to the other party in the event that you default on the contract. Ensuring you have a comprehensive and detailed version of this document mitigates many of these risks. For example, if a consumer questions where their product is and asks for a refund due to late delivery, the T&Cs would state company procedure to follow and the consumer rights in such an event. 

Before proceeding with any other transaction, confirm that your T&Cs have been agreed with the consumer. Furthermore, ensure that they have been made aware of the document at their earliest convenience to prevent any complications from arising. Consumers should also be informed that they can/may reject the document.

Author: Sofia Martiello -

Author: Sofia Martiello -

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DISCLAIMER

This article has been written by law students for the sole purpose of providing informative insight. The information in this article is intended for educational purposes only and does not constitute legal advice, nor should the information be used for the purpose of advising clients. You should seek independent legal advice before relying on any of the information provided in this article.