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The importance of T&Cs for your business

It is crucial for a small business that your customers know clearly what they are purchasing and what your terms of business are.  This is particularly pertinent for online businesses.

importance of T&Cs for your business

T&Cs (Terms and Conditions) are the clauses in a contract that set out the rights and obligations that both parties should be aware of when they enter into a contract. Here is the importance of T&Cs for your small business as explained by Amana Hamilton, CEO of NALP.

Contract vs receipt

There was a landmark case in the courts, way back in 1940, about whether a local authority could rely on a disclaimer (against personal injury) on the back of a ticket given to a customer who hired a deck chair. The courts made the point that in order to rely on this, such a disclaimer would have to be brought to the customer’s notice at the time the contract was being made. In this case, it wasn’t, since the customer only received the ticket after he paid over the money. Therefore, it was a receipt, and consequently, the disclaimer could not be relied on since it had not been brought to the customer’s notice before the contract was made, enabling him to pull out if he wanted. One of the Judges, in that case, commented that if the attendant had mentioned the disclaimer to the deck-chair hirer before he handed over the money, then possibly the disclaimer would have been activated and could be relied on.

It’s the same with regard to T&Cs. They must be brought to the customer’s attention before anything is signed, and the only way to do this is to ensure that they are clear and available to be read and, in addition, they should be highlighted.

A common mistake

In the past, a big mistake that businesses have made is believing that if they hide their terms from the customer and the customer signs the contract, these terms can be relied upon. In other words, if the terms of the contract are part of the ‘small print’, the belief is that once the customer signs the contract, whether or not they have seen or read the terms that they will be bound.

So, is that true? Can the terms forming part of the ‘small print’ be relied upon? Generally, the answer is no.

Ticking the box

If the business specifically draws attention to the T&Cs and asks the customer to tick a box to state that they have read and agreed to be bound to them, that’s a different story.

It may be as simple as creating a tick box on the website for the customer to check before signing anything. That tick box may state that ‘I the undersigned have read the terms and conditions and am happy to proceed’, and if online, then a link to the T&Cs on the website will ensure compliance.

Be clear and unambiguous

It’s vital to draft T&Cs that reflect the business requirements, and there should be no ambiguity. If badly drafted, customers may interpret them in a different way than intended.  It is, therefore, a matter of being precise and succinct so that there can be no misunderstandings.

The best advice is to be simple with terminology and not use legal jargon since very few people know what it means. The more complicated the language is, the more likely that an individual will not bother to read it and this may encourage them not to proceed. On the other hand, if there is a tick box to say they agree to them, and they tick the box, then it may well be legally binding whether or not they have actually read them.

When it comes to terms, a few may be general, for example, confidentiality, intellectual property, disclaimers or limiting liability – and in such cases, precedent clauses (i.e. pre-written, ‘off the shelf’ wording) can be used.  Other, more specific terms and conditions can be tailored to fit a particular website or business – you can write these yourself, look at other T&Cs online, or you may want to engage expert legal help from a solicitor or paralegal.

Handling complaints about your T&Cs

Should a customer complain that they were unaware of a term in the contract but they have ticked a box to state that they have read the T&Cs and agree to them, then unless the term relied upon is legally unenforceable or ‘unreasonable’, the customer will not have much recourse.

If they decide to pursue the point, then the burden will be on the customer to provide evidence that it’s unenforceable or unreasonable in the circumstances. Every business should have a complaints procedure available online, and the first step that a customer should take is to follow this.

From a business’s viewpoint, it is always best to try to resolve the customer’s issues before it is taken further. Once a complaint is made, for the sake of business reputation, it should be adequately dealt with at this early stage.

Whether or not the business decides to acquiesce to the wishes of the customer is up to the individual business. However, it may be best to consider whether or not there are grounds for the complaint. For example, maybe the reason for the complaint is indeed because the term in question is ambiguous, and could be misinterpreted. If so, this is a good opportunity to revisit the T&Cs and tighten them up.

Legally binding T&Cs

At this point, if legal expertise is required to cast an eye over the T&Cs, then it may be a good idea to use the services of a specialist paralegal who can offer advice and assistance at a reasonable cost.

Every business should have clear, unambiguous T&Cs, that have been drafted to reflect the specific requirements of the company. They should also be considered ‘reasonable’ – and they must be made clear to the purchaser before they buy. By following these simple rules, businesses can protect themselves with T&Cs that are legally binding.

More on small business legalities and legal requirements of running your business successfully.

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