What are the most common mistakes when creating terms and con­di­tions?

Fine print can be ir­ri­tat­ing for customers and online store owners alike. However, there are good reasons why it’s a staple of many online stores. General terms and con­di­tions simplify contract handling and provide both buyers and sellers with legal pro­tec­tion. They help stan­dard­ize the purchase process, defining rights and oblig­a­tions. But what should terms and con­di­tions include, why are they so crucial, and what mistakes should be avoided?

What are terms and con­di­tions?

Terms and con­di­tions 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, customers must be informed of, and af­fir­ma­tive­ly accept, the changes (e.g., via checkbox) before a new trans­ac­tion can proceed. Breaching these pro­vi­sions may bring legal con­se­quences for the seller, and reg­u­la­tions can vary by state. Therefore it’s advisable to consult a lawyer.

Busi­ness­es must ensure their terms comply with current US consumer pro­tec­tion laws, including state privacy laws like the Cal­i­for­nia Consumer Privacy Act (CCPA) and its amendment, the Cal­i­for­nia Privacy Rights Act (CPRA), which require trans­paren­cy about how consumer data is handled—es­pe­cial­ly for Cal­i­for­nia residents. Ad­di­tion­al­ly, Federal Trade Com­mis­sion (FTC) rules and guide­lines, such as the Restore Online Shoppers’ Con­fi­dence Act (ROSCA) for sub­scrip­tions and automatic renewals, may impact what must be disclosed in terms and con­di­tions.

In order to ensure the terms and con­di­tions are legally binding, the seller must make them easily ac­ces­si­ble and obtain clear customer consent (e.g., via “I agree” checkbox at checkout). For this reason, simply placing a link to the fine print somewhere on the website (a so-called “browsewrap” agreement) is often not enough. Courts are more likely to enforce “clickwrap” agree­ments, where customers actively confirm the terms. 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?

For busi­ness­es that sell goods, sales contracts are largely governed by the Uniform Com­mer­cial Code (UCC), which has been adopted in some form by every state. By es­tab­lish­ing terms and con­di­tions, sellers can define their own terms within this legal framework without ne­go­ti­at­ing with each customer in­di­vid­u­al­ly. Well-drafted clauses provide better legal pro­tec­tion by clearly outlining the rights and re­spon­si­bil­i­ties of both parties from the start. Terms and con­di­tions form the essential legal foun­da­tion of a contract, par­tic­u­lar­ly when the parties do not interact face-to-face, 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 creating terms and con­di­tions

The contract and delivery terms, which the customer agrees to prior to purchase, are de­ter­mined by the seller. However, this doesn’t mean they have free rein 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 busi­ness­es (B2B), the place of ju­ris­dic­tion for potential claims can be stated; for consumers (B2C), it must respect state consumer pro­tec­tions. Fur­ther­more, the terms and con­di­tions must be clear and easily un­der­stand­able to in­di­vid­u­als without legal expertise.

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
• Data privacy and user rights (compliant with CCPA, GDPR if ap­plic­a­ble)
• Language avail­abil­i­ty in­for­ma­tion, for in­ter­na­tion­al customers

Ac­cord­ing­ly, writing terms and con­di­tions is subject to par­tic­u­lar guide­lines and re­stric­tions. For example, sellers may only disclaim implied war­ranties (e.g., by selling goods “as is”) if the dis­claimer is con­spic­u­ous, and some states restrict or prohibit such dis­claimers for consumer goods. If you offer a written warranty, the federal Magnuson-Moss Warranty Act also limits how far implied war­ranties can be excluded. Fur­ther­more, any dis­ad­van­tages from a buyer’s per­spec­tive have to be clearly stated – not hidden. Clauses that a court considers un­con­scionable or unfair may be un­en­force­able.

Terms and con­di­tions are subject to judicial review. If a court decides that a given clause in the contract is void or unfairly dis­ad­van­tages the buyer, the statutory rules apply instead. This legal oversight ensures that both con­trac­tu­al parties are protected – seller and buyer.

Terms and con­di­tions examples and gen­er­a­tors

It is generally not advisable to create your terms and con­di­tions entirely through automatic gen­er­a­tors or by copying from com­peti­tors. Par­tic­u­lar­ly, free terms and con­di­tions gen­er­a­tors often produce documents with vague or overly broad language, failing to cover important details specific to your online store.

Current paid terms and con­di­tions examples and tools with industry-specific templates can provide crucial guidance and sug­ges­tions, offering a strong foun­da­tion for your terms and con­di­tions. However, it’s important to keep in mind that these templates may not be suitable for every business within a par­tic­u­lar industry or legally compliant for your specific op­er­a­tions. For example, US-based busi­ness­es need to ensure com­pli­ance with laws such as the Cal­i­for­nia Consumer Privacy Act (CCPA) and the Federal Trade Com­mis­sion (FTC) guide­lines, which may not be ad­e­quate­ly addressed by generic templates.

Always ensure that the final version of your terms and con­di­tions is tailored to your business and reviewed by a legal pro­fes­sion­al to avoid any potential legal issues.

The most common mistakes when creating terms and con­di­tions

• Ambiguous terms and con­di­tions: Using vague or overly broad language in your terms and con­di­tions, such as unclear clauses regarding can­cel­la­tion policies, return processes, or refunds, can lead to legal disputes. It’s essential that all terms are clear, specific, and legally en­force­able, es­pe­cial­ly in the context of consumer rights.
• Missing contract language in­for­ma­tion: If your business operates in­ter­na­tion­al­ly or offers services in multiple languages, you should specify which languages the terms are provided in and which language governs the contract. This avoids disputes over differing trans­la­tions.
• Unfair ju­ris­dic­tion and ar­bi­tra­tion clauses: Forum selection and ar­bi­tra­tion clauses are generally en­force­able in the US, even in consumer contracts. However, courts may refuse to enforce them if they are hidden, un­rea­son­able, or fun­da­men­tal­ly unfair to consumers, and some states restrict such clauses. Make sure they are clearly visible and rea­son­able.
• Unclear can­cel­la­tion and return policy: There is no general federal right to return goods bought online, so your return policy is defined in your terms. If you offer returns, explain the con­di­tions, deadlines, and process clearly and without un­nec­es­sary in­tro­duc­to­ry text. For sub­scrip­tions and automatic renewals, the FTC and the Restore Online Shoppers’ Con­fi­dence Act (ROSCA) require clear dis­clo­sure of the terms and a simple way to cancel.
• Unclear return shipping cost terms: While busi­ness­es are free to charge for return shipping, terms regarding return shipping costs must be clearly explained and not left to as­sump­tion. Failure to clearly address this in terms and con­di­tions may lead to disputes with consumers, es­pe­cial­ly if the return shipping policy is in­con­sis­tent with the buyer’s ex­pec­ta­tions or state laws.
• No clear headings in key sections: In the US, terms and con­di­tions that are hard to navigate may be chal­lenged by consumers or courts. For example, sections related to can­cel­la­tion rights, dispute res­o­lu­tion, or return policies should have clear and de­scrip­tive headings (e.g., “Return policy”, “Refunds”, “Dispute res­o­lu­tion”). Failing to organize these sections properly could lead to confusion and potential legal chal­lenges under consumer pro­tec­tion laws.

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