Terms and Conditions

Contracts are key in all areas of business, regardless of whether it’s for the sale of goods or the supply of services. However, critical to a contract are its terms and conditions. These will not only help to reduce any misunderstandings and legal disputes, they’ll help protect you, the business and your customer’s needs.

What are terms and conditions?

Terms and conditions are legally binding terms of the trade which outline the rights and responsibilities of all the parties involved in a business transaction. In business, these terms and conditions are adequately brought to the customer’s attention or made available to every customer prior to every transaction taking place.

Terms and conditions will often vary depending on the business, service or industry.

Terms and conditions

What’s included in terms and conditions?

Some common terms and conditions should apply to every order or transactions taken, and will cover:

  • The type of product provided and the price paid;
  • How a contract is formed;
  • Payment terms;
  • How delivery will take place;
  • The business’ policy on returns and refunds;
  • The business’ position on defective goods or services; and
  • Australian Consumer Law liabilities and disclaimers.

If there happens to be any kind of legal dispute such as a consumer making a claim or a business suing a consumer, the courts will use terms and conditions as a basis for assessing the validity of the complaint and case. It’s for this very reason that terms and conditions are the foundation of any contract or transaction – to protect you and limit your liability. It can act as somewhat of an insurance policy for your business if you need to.

Without any terms and conditions setting out your trading terms, businesses will have to rely on what evidence they have to show their terms of business have been legally incorporated in their contract with their clients. This may prove a difficult task and may not hold up in court.

Types of disputes that can occur

It’s not uncommon that errors do occur in terms in conditions which can lead to disputes. Some of the most common types of disputes are in relation to:

  • Not including the entity you are contracting with. This means the business name and Australian Company Number (ACN) or Australian Business Number (ABN) is not included on the document.
  • References to things, legislation or other clauses that do not – or no longer – exist;
  • Confusing, ambiguous or inconsistent terms used. Care must be taken to use accurate words to convey the desired meaning throughout the entire document. 
  • Incorrect defined terms. In a terms and conditions document, it is good practice to bold any defined terms. Any non-bold works will likely possess their natural or ordinary meaning.
  • Including unfair or unconscionable contract terms that potentially void the clause. These unfair terms are likely to cause imbalance to rights and responsibilities or would cause detriment to a party if it were applied
  • Terms that try to exclude consumer rights. Consumer laws are there to protect your customers against unfair or misleading contracts or transactions, therefore you will need to make sure your terms and conditions are appropriately worded.

Despite these common disputes, there are ways businesses can take extra precaution to protect themselves. For example, it is common for business’ terms and condition to explicitly limit their liability such as by putting a monetary cap on what will be paid. This might be explicitly stating that the business’ total liability towards a customer will not exceed the price paid for the purchase of products.

How to write terms and conditions

While it’s not critical, it is good practice to seek a legal professional regarding your terms & conditions. The old “copy and paste” trick from another business or website isn’t necessarily going to cover your business’ needs and give you long term security; there could be legislation that no longer applies, or you could be missing important areas that can cause your terms and conditions to be voided or unenforceable. A lawyer who understands your business will help you to ensure your terms and conditions are accurate, compliant with current legislation, and above all else, legally enforceable when you need them to be.

Contract law

More on contract law

Your business terms and conditions are perhaps the most important aspect that can safeguard your business in times of crisis and help to avoid a dispute. It’s important your terms and conditions are clearly outlined and provided at every transaction.

Terms and conditions are so essential because they:

  • Provide certainty;
  • Comply with the law;
  • Manage expectations;
  • Enable customer service; and
  • Enforcing a contractual agreement.

If you need help with writing or reviewing your business’ terms and conditions, get in touch with our team of experienced commercial solicitors, who can help to protect you and your business. Contact lawyers near you now.