How to avoid mistakes in Terms and Con­di­tions

The so-called fine print can be ir­ri­tat­ing for customers, but also for online store owners. Yet, there are good reasons why it’s found on so many websites and pro­fes­sion­al online stores. General terms and con­di­tions intend to simplify handling contracts and to provide buyers and sellers with legal pro­tec­tion. They fa­cil­i­tate the stan­dard­iza­tion of all purchase processes, rights, and oblig­a­tions. But what should terms and con­di­tions include, why are they so crucial, and what potential errors must be avoided?

General terms and con­di­tions, GTC for short, are pre-for­mu­lat­ed con­trac­tu­al terms that one party (usually the seller) makes to another party (i.e. the buyer). One important feature of terms and con­di­tions is that they are made by the seller. Therefore they are typically valid for all trans­ac­tions through the company rather than just for in­di­vid­ual sales. If the seller wishes to amend the terms, the contract partners must be informed of, and accept, the changes before a new contract can be confirmed.

Breaching these pro­vi­sions may bring legal con­se­quences for the seller, and reg­u­la­tions can vary according to industry. Therefore it’s advisable to consult a lawyer.

In order to ensure the terms and con­di­tions are legally binding, the seller must ex­plic­it­ly inform the other con­trac­tu­al partner (the buyer) of its contents, which the buyer must also accept. For this reason, making the fine print available on the website is not enough: the seller must also draw the buyer’s attention to them before con­clud­ing the contract. In contexts where this is difficult – such as at movie theaters or parking lots – it’s suf­fi­cient to clearly display the terms and con­di­tions. In such cases, pur­chas­ing the product or service means that the buyer accepts the terms.

Those who complete contracts on a daily basis, in the form of sales for example, are protected by the Uniform Com­mer­cial Code (UCC). Ad­di­tion­al­ly, by creating terms and con­di­tions, sellers can set their own terms without having to negotiate them with each in­di­vid­ual customer. Clearly written clauses lead to better legal security, since it’s explicit from the outset who has which rights and oblig­a­tions. Terms and con­di­tions serve as the crucial legal basis of a contract, es­pe­cial­ly when the con­trac­tu­al partners don’t interact in person, as in e-commerce.

The advantage of the fine print for a seller, therefore, is that the same terms apply for every purchase and to every contract partner (buyer). Nev­er­the­less, a buyer must still accept the terms and con­di­tions contract before they can shop. For consumers, this generally means either reading lengthy and tediously com­pli­cat­ed text or simply accepting the terms, trusting that they don’t contain any un­pleas­ant surprises. For this reason, it’s sensible to read at least the most pertinent points in the fine print and to be aware that certain terms must be included by law.

The contract and delivery terms, which the customer agrees to prior to purchase, is de­ter­mined by the seller. However, this doesn’t mean they have free reign when writing terms and con­di­tions – there are guide­lines de­ter­min­ing which clauses should be included. This covers, for instance, details on who is liable for damages and who has the burden of proof (even for damage after receipt of the product or service). For contracts between traders, the place of ju­ris­dic­tion for potential claims must also be stated. In addition, the terms and con­di­tions must comply with the in­tel­li­gi­bil­i­ty re­quire­ment. That is, they must be easily un­der­stand­able for laymen.

The following ought to be included in the terms and con­di­tions:

• In­for­ma­tion about the seller
• Scope of the contract
• Object of the contract
• Deadlines
• Formal re­quire­ments
• Liability lim­i­ta­tions
• Payment
• Delivery terms
• Warranty or guarantee
• Retention of title
• In­for­ma­tion about the contract storage
• Language avail­abil­i­ty in­for­ma­tion, for in­ter­na­tion­al customers

Ac­cord­ing­ly, writing terms and con­di­tions is subject to par­tic­u­lar guide­lines and re­stric­tions. One example of this is that the seller may not insert a general dis­claimer for new goods, stating that they aren’t re­spon­si­ble for any defects or damage. Fur­ther­more, any dis­ad­van­tages from a buyer’s per­spec­tive have to be clearly stated – not hidden. Generally speaking, the seller must bear the cost of any such un­rea­son­able clauses.

General terms and con­di­tions are fully ver­i­fi­able in the judicial process. This means that a legal rule is ap­plic­a­ble whenever a court decides that a given clause in the contract is void, or otherwise dis­ad­van­tages the buyer. This legal oversight ensures that both con­trac­tu­al parties are protected – seller and buyer.

In principle, it is not advisable to generate terms and con­di­tions au­to­mat­i­cal­ly or copy them from the com­pe­ti­tion. Fine print gen­er­a­tors online often produce vaguely worded clauses and don’t cover all the necessary details for par­tic­u­lar online stores. However, there are a number of contract sample templates online, including for terms and con­di­tions, which can provide a useful starting point. Nev­er­the­less, these terms and con­di­tions will not nec­es­sar­i­ly be ap­pro­pri­ate for specific companies or in­dus­tries, and may not be legally binding. Other common errors include:

The buyer must be informed which languages the terms and con­di­tions are available in.

These clauses determine the place of ju­ris­dic­tion and indicate the court where disputes are to be brought. However, ju­ris­dic­tion agree­ments don’t apply to contracts with consumers – they are only valid between traders.

The can­cel­la­tion policy is a standard part of the terms and con­di­tions and shouldn’t be sup­ple­ment­ed by an in­tro­duc­tion.

It’s always advisable to have terms and con­di­tions checked by a lawyer in order to avoid any legal con­se­quences.