Terms and conditions (also referred to as T&C, ToS and ToU) are as old as agreements and contracts. They can be composed of requirements, rules, special arrangements, provisions, and standards. All of these make an integral part of a contract. One must agree to abide by all of them in order to use a service or make an online purchase.
Clicking on accept terms and conditions button whenever we are registering on website, downloading an app, or in our case signing up for services or making an online purchase, is legally binding. As the Guardian states, only 7% of people online read the entire terms and condition document. At the same time, 20% of people have suffered in one way or another by not reading it.
Nobody blames you – sometimes the terms and condition is too long and typed in a very small font, so you have to spend a lot of time to read it and put some effort into understanding it since it can contain lots of legal terminologies. On the other hand, any lawyer will strongly advise you to read anything you are signing, even if it is a simple click on a "I agree to the terms and conditions" checkbox of a digital document.
Signing up for services and making purchases online
Since it is very rare nowadays to sign up for a service or make an online purchase without first having to accept terms and conditions, it is most likely that everyone has clicked that "I agree" checkbox at least once in their life. But what happens when we do? Do we understand the meaning of "T&C apply"? Are we as users binding ourselves to legally enforceable contracts by accepting terms and conditions online?
As you might already know both sides of a legal contract must agree to the terms and conditions in order to create a legally enforceable agreement.
Online, agreements can be divided into two categories:
- A click-wrap agreement is the one when you are required to click the "I agree to the terms and conditions" or "I accept terms and conditions" checkbox, but before you do so, the terms and conditions are displayed for you to read.
- A browse-wrap agreement is the one where the service providers put the terms and conditions agreement somewhere on the site. In this scenario, the mere use of a website is seen as a user's agreement to a set of terms and conditions.
Thankfully, if the dispute reaches a court, most judges will willingly recognize only click-wraps as contracts. When you click on a "I agree to the terms and conditions" checkbox, it is seen by the legal authorities as user's assent. Binding agreements where the user engages in affirmative conduct by accepting the terms of an agreement has a lot higher chance of standing up in court than any other.
For those of you selling merchandise or services online, it might be important to know that it is recommended to provide customers a reasonable notice and an opportunity to read the T&C. At this point, you get the full picture. Accepting terms and conditions by clicking on a checkbox is not what creates the legal contract, but a reasonable notice and an opportunity to review the agreement in combination with clicking on the "I agree" checkbox do.
This is why many Software as a Service (SaaS) companies not only require a customer to click the "I agree" checkbox, but to scroll down to the end of the terms and conditions agreement before even being able to click on it. Making the T&C appear in its entirety at least once makes it enforceable.
Now that we know all of this, it is much easier to understand what happens when you click on that button. Most of the companies post a quick sum of their T&C just above the acceptable checkbox. It is designed to be quite clear for anyone, as the sentence usually starts with "by clicking on 'I agree' you are confirming that you have...". Of course, there are some exceptions when the company displays nothing but "T&C apply" without elaborating on it or at least providing a link to their terms and conditions so look out of those.
Physical vs online contract signing
For starters, it is important to know that in most cases accepting terms and conditions online is no different from signing a physical copy of the contract in the real world. This is why on many occasions the terms and conditions are looked upon as a digital form of contract. There are some differences, though.
For instance, did you know about the term "best evidence"? It is a rule of evidence law. It clearly states that the best available evidence is the one that is going to be admitted in the court of law. It is usually practiced when there is a dispute as to the authenticity of the contract copies that are presented to the court. And if you or company violates any part of terms and conditions or contract, and you/they want to settle it in court, a physical copy will have priority over the printed, digital one.
If you accepted the terms and conditions online that never included you signing any physical copy, it will be fine, but should you sign any physical copy of the contract, make sure to keep it. It will be of much help in the event of a challenge and legal issues that emerge from the violation of the contract.
There is another reason why physical copies of a contract are far better than online ones and it is consistency and uniformity. This is because legal documentation constantly has to be updated and maintained. When we are talking about the digital realm, updating contracts in the form of terms and conditions is unilateral, and since the third-party is not updated about the changes made to legally binding documents, can it be held binding?
When contracts are written or printed out and signed, it is much easier to maintain consistency. The third party can only be bound by new terms if they were updated about the changes. When it comes to updating the terms and conditions, the subject is very complicated legally. This is why there are different court rulings over the very same case scenarios.
On the other hand, there are many benefits of using terms and conditions agreements for online purchases and service uses. It is fast, cheap and doesn't require any storage space. It is also a type of template document so that users are not disclosing any personal information by clicking I accept terms and conditions and binding to contract. This way, there is no risk whatsoever to confidentiality and security.
Why it is important to read and understand terms and conditions
It is a global trend for the average internet user to just click the "I agree" checkbox without even reading the terms and conditions they are agreeing with. Not long ago, BBC addressed a very interesting topic – things consumers don't want to do. On BBC's top list of those things, reading terms and conditions ranked as number two. This is a bad practice for numerous reasons. It basically boils down to not knowing what the company's and third-party's rights and obligations are, or what you, as a consumer, can expect from the company.
When you agree to terms and conditions, you are basically agreeing to all sorts of things. In order to know exactly what you have agreed to, you have to read and to make sure you understand everything in the terms and conditions. Most people are usually surprised when they find out what they have agreed to.
Remember Instagram's terms and conditions from a while ago? By accepting those, users agreed that images and videos they upload can be used by Instagram or given to any other company Instagram chooses. Also, all their personal information including name, email address, phone number, private messages etc. can be used by Instagram and shared with companies connected with Instagram. Did you know that?
Reading and understanding terms and conditions can also help you avoid some fees and charges that are clearly stated in the contract. This is why it is very important to read it if you don't want to end up paying extra. Many people are surprised when they find out that they have to pay extra charges because they don't know how vital it is to make sure you understand everything stated in the payment terms and conditions before accepting it.
In some cases, you may not be satisfied with the service or the item you have bought online. If you find out that you can get your money back because there is a clause in the contract clearly stating it, you won't be able to challenge it in court with an excuse that you didn't know it was there when you agreed upon it.
Sometimes, when the terms and conditions are far too long to read, try to Google the simplified version. You may also want to look for specific clauses referring to the subject of your interest. What are your rights if the service fails? What can you do if you suffer a data loss? Under which conditions do you have the right to terminate the agreement without facing any penalties?
Why it is important for companies to write terms and conditions
Terms and conditions have become a vital part of businesses that offer their services and products online. Basically, it is a legally binding contract between a business and its customers. In the T&C business state the customer's rights and the guidelines and rules their customers have to follow and must agree to, in order to get access to their product or service.
This subject is very important for businesses and having a professional team of lawyers to write the T&C has become a necessity for any large corporation. For smaller to medium businesses though the costs may be too high to afford or justify it. Creating terms and conditions agreement online is a much better and cheaper option that covers pretty much all legal aspects of writing such document.
In order to protect the business from expensive lawsuits a terms and conditions document has to contain several important clauses:
Data collection and usage clause
In this clause, you must inform customers if you are collecting some data about them, for instance, purchasing habits, internet browsing behavior etc. It is also important to inform the customers if you are using the data you collect and with whom you might share it.
Harmful language clause
Since there are many businesses that allow a comment and review section on their eCommerce website, it is important to state that harmful language won't be tolerated and that such posts and comments will be automatically deleted.
Intellectual property clause
This is how you as a business owner will protect and remain the sole owner of the content you are offering online. International copyright laws protect your content and stating this in your terms and conditions will allow you to legally pursue anyone who violates this clause.
In this clause, business informs the customers under which circumstances their agreement may be terminated. Clearly stating your obligations and the obligations of a customer really help if it happens that you need to terminate a contract when a customer violates some other clause.
In this clause, businesses limit their liability in scenarios when the customer is displeased with a service or product.
Governing law clause
It is also important to set the governing law as one of the clauses of your terms and conditions. Governing law notifies the customer about who has jurisdiction over the terms presented in the contract.
In the end, it is of utmost importance to force your customer to click on the I agree to the terms and conditions before you allow them to make a purchase online or to sign up for your services. By doing so, you will give the customers a reasonable notice and an opportunity to review the agreement. This, in combination with an "I agree" checkbox, makes the terms and conditions legally binding.
The terms and conditions are an inseparable part of online business-customer transactions. It sets the legal framework inside of which each party has specific rights and obligations. So if your company still doesn't have proper terms and conditions available, make sure to create it as soon as possible to avoid any legal issues and protect yourself and your company.