How to Avoid Disputes with eCommerce Terms and Conditions
Starting an online business has never been easier. With platforms like Shopify and BigCommerce making it possible for physical retailers with little to no technical background to get online in a matter of minutes.
eCommerce truly is the future of retail as it makes it possible for businesses to reach customers globally. It truly is a win-win for both retailers, which now have an unlimited number of potential buyers and customers who have access to more options than ever before.
However, anyone considering operating an eCommerce store must keep in mind the risks and the liabilities that they expose themselves to by doing so. A good risk-mitigation strategy is to have detailed and easily accessible terms and conditions on your website.
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What are Terms and Conditions for eCommerce?
Terms and conditions constitute a legally binding agreement between you, the business, and your website users and customers. They are used to set the rules with which your users agree to comply when visiting your website and making purchases through your online store as well as clearly defines your rights and responsibilities.
While having terms and conditions is generally not required by law, it is a wise idea to have them as it is a good way for a business to protect and limit its liability.
Do You Need Terms and Conditions for Your Online Store?
Having detailed and easy-to-understand terms and conditions agreement on your eCommerce store can give you some form of legal assurance should a misunderstanding or disagreement arise with one of your customers.
Indeed, it sets out the rights and responsibilities of each party and thus can help prevent disputes and serve as a strong argument in court against someone claiming ignorance. It can notably protect the ownership rights that you have over your website content and act as a deterrent against copyright infringement.
Moreover, it can serve to limit your liability if you include appropriate and enforceable clauses and disclaimers. This could come in handy should a customer suffer damages from following a link that appears on your website, for example.
It puts your business and your customers on equal footing as it informs them of the rules that they need to abide by when using your website and purchasing from your store.
Last but not least, it makes them aware of your business practices and factors that could influence whether or not they choose to purchase from you, such as applicable shipping fees and refund policies.
What to Include in Your Terms and Conditions?
What you choose to include in your terms and conditions is up to you but there are some generally-accepted best practices which we will cover through the following examples.
Note that you may wish to add on to these by including guidelines governing user behavior on your website or by providing a warning that following third-party links is at your users’ own risk for example.
The following are just what they are, examples from real businesses, to facilitate your understanding of what terms and conditions are. Keep in mind that it's best to write terms and conditions specifically for your own eCommerce website to properly address all of the unique aspects of your business.
Expert tip: Take the hassle of writing your own terms and conditions agreement away with our eCommerce terms and conditions generator. It will save you hours of work and possible costly legal mistakes.
Terms of Sale
This section in your terms and conditions sets out how a sales contract arises between you, the retailer, and your customers. It should set out the elements that make an order valid or acceptable as well as any basic requirements, such as being of legal age.
Japanese retailer Uniqlo includes the following statement in its terms and conditions:
Like most online retailers, Uniqlo requires that customers be over the age of 18 years old and own a valid credit or debit card to be able to place an order on its website.
The clause that follows specifies that an order is only considered accepted once payment has been approved and the customer’s card has been debited:
Uniqlo specifically mentions that receiving an order acknowledgment email does not mean that the order has been accepted, it only means that the order has been received and thus can still be rejected by the retailer.
This is where you set out the methods of payment that your customers can use to proceed with their purchase as well as the currency in which they will be charged.
This screenshot was taken on Louis Vuitton’s U.S. website, which explains why the retailer mentions that the price to be paid is quoted in U.S. dollars. It also mentions that it is inclusive of shipping and handling as well as all applicable taxes.
By providing payment information, a customer represents and warrants that they are the authorized cardholder. Interestingly, this particular retailer does not accept payment by gift cards and gift certificates on its website.
If that’s your case, this is something that you should include in your terms and conditions to avoid any bad surprises for your customers.
Shipping and Refund Policy
This is, without a doubt, something that you should address in your terms and conditions, as online shoppers want and need to know about your shipping and refund practices in order to have a pleasant shopping experience.
Here is an extract from furniture retailer West Elm’s terms and conditions:
Note that it links to the company’s shipping and returns policy, which is very detailed and covers fees, carriers, and returns and refunds processes for both domestic and international orders.
Every eCommerce store should have a detailed return and refund policy in place in order to be transparent with its customers and avoid any misunderstandings. This is also where you would address who is responsible for paying import taxes and duties when shipping internationally.
Expert tip: Take the hassle of writing your own refund policy away with our refund policy generator. It will save you hours of work and help you increase sales.
Most major online retailers include in their terms and conditions text that warn customers about potential errors in prices or inventory.
You may wish to do the same to protect your business should there be a technical glitch or human error that could cause a discrepancy between what appears on your eCommerce platform and the actual inventory that you have available.
Here is how membership-only wholesale retailer Costco does this:
Costco notably reserves the right to cancel and not process an order in a situation in which the price advertised on its website was inaccurate.
It also specifies that the company may choose to change prices as well as any promotional offers as it pleases and without having to provide prior notice to its website users.
A lot of eCommerce websites include a clause in their terms and conditions that warns customers that, while they use their best efforts to offer an accurate representation of their products through descriptions and images, they may look a tad different in real life.
This helps protect the company should it receive a consumer complaint claiming that the product received looks slightly different from what was pictured on the website.
This is especially important if a business is selling goods manufactured and provided by third parties.
Walmart mentions that a customer’s sole remedy in these circumstances is to return the product in its original condition.
Whether it is to protect the unique products sold on your website, your trademarks, or the website itself, including content such as blog posts and images, having an intellectual property clause is a must.
This will serve to warn website users that all content on your website is your property and is subject to copyright protection and thus should not be used, reproduced, or modified without your explicit authorization.
Office supplies retailer Staples includes the following intellectual property clause in its terms and conditions:
Staples specifies that all content on the website is owned by or licensed by the company and is not to be used without obtaining prior written consent. It also reinforces that it holds trademarks over most elements on its websites, including the website design itself.
Limitation of Liability
Here is how toy retailer Toys R Us does it in the terms that appear on their website:
This limitation of liability clause specifies that the company will not be held liable for any damages that could arise from using its website (or being unable to use it), including viruses. It also specifies that in the event that there is a problem with the website, a user’s sole remedy is to stop using said website.
Consumer electronics retailer Best Buy’s terms and conditions include the following disclaimers and limitation of liability clause:
This clause specifies that Best Buy will not be held liable for any indirect, incidental, or consequential damages that could be attributed to a customer’s use of a product purchased through its website.
Moreover, it mentions that a warranty on products sold on its website is to be provided by the manufacturer of that product, and not the retailer itself.
A common practice in the eCommerce industry is to ask customers for reviews and photos.
This helps build a relationship of trust with customers and can serve as an incentive for undecided shoppers as they could be convinced to go through with a purchase by seeing what the product looks like on actual customers rather than models.
If this is something that you do, think of including a clause in your terms and conditions that sets out how this content can be used by your company as well as rules to be followed by people that wish to submit these reviews.
Target specifies that, while it welcomes reviews and comments, it reserves the right to monitor and remove any user-generated content at its sole discretion.
Moreover, the company specifies that by submitting such content, one grants Target a perpetual and irrevocable license to use it as detailed below without receiving any form of compensation.
eCommerce has well and truly given new life to existing retailers and provided small businesses with a new platform that opens up a global market of potential customers. However, this can make it challenging when a dispute arises as, sometimes, a company will be headquartered in a different country than its customers.
This is why including information about dispute resolution in terms and conditions is wise. It should set out which court of law and country will have jurisdiction over any legal matter.
Here is how department store Canadian Tire does it:
This extract of its terms and conditions sets out that any dispute that arises out of or related to the use of its website and terms and conditions shall be submitted to the jurisdiction of the Toronto courts in Ontario, Canada.
These elements are just examples of what you may wish to include in your terms and conditions.
Depending on the nature of your business and the products that you sell, you may wish to add to this.
Where to Display Terms and Conditions on Your Online Store?
More and more, eCommerce websites require a customer’s active consent to their terms and conditions by having them check a box when they create an account or as a final step during the checkout process.
This ensures that you have provided your customers with the opportunity to read through and accept your terms and conditions and allows you to store their consent in the event a dispute arises.
Wherever you decide to display your terms and conditions, make sure that they are easily accessible and use language that is easy to understand for your customers. You should also include contact information so that they can get in touch should they have any questions.
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- Updated on February 22, 2021