Common mistakes when creating 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?
What are terms and conditions?
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.
Why are terms and conditions for online stores important?
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.
What you should look out for when you create terms and conditions
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
- Formal requirements
- Liability limitations
- 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.
The most common mistakes
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:
No reference to contract language
The buyer must be informed which languages the terms and conditions are available in.
Jurisdiction agreement with consumers
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.
Introduction to the cancellation policy
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.