As you may already know, terms and conditions are a great way to establish the rules regarding the relationship you have with your customers as a business owner, including what will happen if a disagreement or breach took place.
And as common as those agreements are, it is completely natural to wonder if those rules will be taken into consideration in court during a legal dispute with your customers, should it actually take place.
In this article, I will discuss legal enforceability and give tips along the way to better protect your online business.
- Terms and conditions can be legally enforceable if they’re clear, valid, and properly accepted by customers.
- Ensure terms are consistent with applicable laws and specify jurisdiction for potential disputes.
- Obtain proper customer consent, ideally via explicit agreement, and provide access to terms after signup.
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Do Terms and Conditions Hold Up in Court?
In short, the answer is yes. When you create your terms and conditions, your customers are legally obligated to comply with them.
But not so fast! There are a few things you need to make sure of first:
- Your terms and conditions are clear enough for all your clients to understand.
- You obtained the acceptance in the proper way.
- Your terms are legally valid.
- You are aware of the local laws and regulations.
There was a case in the UK where a provider of free WI-FI included some pretty silly clauses in their terms and conditions.
They obligated customers to agree to 1,000 hours of community service, give up their firstborn child, and a provision to grant special considerations like financial compensation for anyone that identified these terms and emailed the organization.
Shockingly, after four months of people using their free Wi-Fi, only one person contacted them to claim their prize.
No court would have enforced such ridiculous terms regardless of whether you’re in the USA or Canada, or really anywhere else in the world.
It was clear that the company had drafted the terms of the service agreement as a joke and no one was likely to take them seriously.
How to Improve Your Terms’ Enforceability?
No business wants to find out on the day of the court that their terms and conditions agreement is suddenly unenforceable due to some silly mistake or omission.
As such, it makes sense to put a bit of effort into making sure your terms are drafted correctly.
Here are some of the things you should pay attention to:
Be Consistent With Applicable Laws
If there are specific regulations that apply to your industry, in my experience, it’s best to include them in the terms and conditions.
For example, the U.K. has the Consumer Rights Act that prohibits business people from excluding liability for injuries caused by their negligence. So, you cannot include a clause that says something like this:
“You cannot sue our company if you were subjected to damages while using our product.”
And in certain U.S. states like Kansas and Connecticut, the law entitles consumers to a refund if they are unsatisfied with their purchase.
Therefore, if you have a “no refunds under any circumstances” clause in your terms and conditions, the court would likely ignore it and allow the customer to get a refund.
PRO TIP: It is very helpful to not leave it up for interpretation and specify in the agreement the jurisdiction and governing law you prefer and will be referred to later on in case a dispute occurs.
Be Clear and Thorough
You need to make sure that you are writing your terms in plain language rather than using a lot of legal jargon. This will help ensure your customers clearly understand what they are signing up for so there won’t be any misunderstandings or disagreements.
I would also suggest that you include all the necessary provisions and details in your terms and conditions agreement required in your area or your business industry.
One simple way to do this is by using a professional service that will take the burden off of you and ensure all the requirements are met and no clause goes missing based on the information you provide.
Get Proper Consent
Solely having terms and conditions will not be enough for them to stand up in court. You have to make sure that the customer actually agrees with them.
Ideally, customers should provide explicit consent before they can begin using your services or products. This could be as simple as making them check a box stating that they agree with the terms and conditions or even providing a signature.
PRO TIP: I highly suggest letting your customers access a copy of the terms and conditions after they finish signing up. This can help save a lot of time or even avoid legal action altogether if they can easily refer to what they consented to.
Frequently Asked Questions
Can I link to terms and conditions from more than one place?
Yes, you can. I would recommend that you place your terms and conditions in an easily accessible place that is clearly visible to your customers.
Can terms and conditions be located on a different website?
Yes, your terms and conditions can be located on a separate website as long as it’s easily accessible by your customers and does not require them to jump through hoops just to read it.
Can terms and conditions be stored in a PDF document?
Yes, you can store your terms and conditions in a PDF document or in any other format that is commonly available, such as MS Word, Google Docs, or even plain text.
What should I include in my terms and conditions?
You should include all the necessary provisions and details in your terms and conditions agreement based on how you operate your business and its location to comply with their laws and requirements.