Business Terms and Conditions - how binding are they really?
As a small business, especially one that is online, it is important that your customers know clearly what they are purchasing and what your terms of business are.
What are Terms and Conditions (T&Cs)?
These 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.
Some of the biggest mistakes that businesses have made in the past are believing that if they hide their terms from the customer, and the customer signs the contract, that 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.
Is this true? Can the terms forming part of the ‘small print’ be relied upon?
The answer in general, is no!
However, 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 them, that’s a different story.
Way back in 1940 there was a landmark case in the courts 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. It was therefore 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 is 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.
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.
Clear and unambiguous
As a business, it is important 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 to what was originally intended. This is not an exact science in that sometimes it takes a few mistakes to ensure that what you have expressed in your T&Cs is relevant and necessary. It therefore becomes 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 this means. The more the language is complicated, 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 drafting some 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.
What can a business do if a customer complains about T&Cs?
If a customer complains that they were unaware of a term in the contract and the customer has 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, however, s/he decides to pursue the point, then the burden will be on the customer to provide evidence that it is 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 is grounds for the complaint. For example, maybe the reason for 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.
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.
This article was originally published in Keep The Faith, May 2019. You can read the original here.
ABOUT THE AUTHOR
Amanda Hamilton is Chief Executive of the National Association of Licensed Paralegals (NALP), a non-profit Membership Body and the only Paralegal body that is recognised as an awarding organisation by Ofqual (the regulator of qualifications in England). Through its training arm, NALP Training, trading as National Paralegal College, accredited recognised professional paralegal qualifications are offered for a career as a paralegal professional.
See: http://www.nationalparalegals.co.uk and https://www.nalptraining.co.uk/
LinkedIn - https://www.linkedin.com/in/amanda-hamilton-llb-hons-840a6a16/