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The importance of getting terms and conditions right

Turner Little Terms and conditions right

In the rush to cover everything needed to launch a small business, certain aspects can be neglected. For example, many underestimate the importance of terms and conditions for small businesses.

Ensuring terms and conditions are prominent, accessible, easily understood and legally correct is vital for small businesses to avoid potentially expensive legal action. Customers are legally entitled to information that shows exactly what they’re buying and what your business terms are. This is particularly important if your business operates online.

Terms and conditions for small businesses

Terms and conditions (T&Cs) for small businesses are those contract clauses that spell out the obligations, rights and legalities pertaining to both parties entering a contract. Businesses that hide their T&Cs or attempt to blur boundaries with wording or accessibility, are still liable.

A mistake some businesses make is believing that, if they hide pertinent T&Cs in the small print and a customer signs the contract, the customers is still bound by them. In the eyes of the law, this is not the case.

Legal precedent for T&Cs

In 1940, there was a landmark legal court case regarding a local authority’s T&Cs. It centred on whether the local authority could legally rely on a disclaimer against personal injury, which was on the reverse of a ticket given to a person who hired a deckchair from them.

The courts said that this kind of disclaimer must be clearly and obviously brought to the attention of the customer when the contract was being made. Therefore, the local authority should have spelled it out at the same time the customer bought the ticket. However, in this case, the customer received the ticket (with the information printed on the back) after he had paid the money to the local authority. Therefore, the court ruled the disclaimer was not valid as the customer had had no opportunity to refuse the contract based on the actuality of the terms.

Legally, the same applies to T&Cs. They must be clearly brought to the customer’s attention before contracts are signed. The only sure way to do this is to make sure that they are easily visible, clearly written and highlighted. Often, this is where the tick box comes in when you buy something online. The text accompanying the tick box says something along the lines of: “I the undersigned have read the terms and conditions and am happy to proceed.”

 Clarity is key for small business T&Cs

Small businesses should leave no room for ambiguity when it comes to T&Cs. If they are poorly drafted and rendered unclear, then customers might interpret them incorrectly. Ensure that there is absolutely no room for misunderstandings, by drafting succinct and exact T&Cs.

Simple terminology and an absence of legal jargon are best, as most people don’t have a thorough understanding of complex legal language. The more complex the wording used is, the less likely a customer is to read it. This could put them off the transaction. Some terms are more general. These include limiting liability, disclaimers and IP (intellectual property). In these cases, it’s acceptable to use pre-written clauses. More specific T&Cs for your business should be written from scratch.

If a client or customer says they were unaware of your terms and conditions but ticked the box complying with them, they do not have much recourse. Exceptions to this include if a term included in the T&Cs could be construed as ‘unreasonable’ or is legally unenforceable. If the customer wants to pursue the case despite this, the onus is on them to show clear evidence that the T&Cs are unenforceable. This is why small businesses should always include a tick box online before a customer signs a contract.

Every small business should include an easily accessible complaints procedure online. If a customer does pursue a complaint through this, it is always in the company’s best interest to try and resolve it immediately.

James Turner, Managing Director of Turner Little Limited says: “Small businesses should engage the services of a professional to ensure their T&Cs are working in their best interests. It’s not always clear whether a certain term is enforceable or legal, and specialist advice should be sought.”

“Every small business should have unambiguous, well-written, clear and accessible terms and conditions. They should be drafted to fit in with the specific needs of the business and should be considered legally enforceable and reasonable. This must be made clear to the customer before they sign a contract or buy a product or service. The rules are simple, but they are absolutely vital for small businesses who want to avoid possible legal headaches further down the line. T&Cs should also be periodically checked and redrafted if necessary, to comply with changing legislation or to better suit the company.”

 

About Turner Little
Founded in 1998 in Yorkshire, UK, Turner Little is a specialist UK and offshore company formation, banking and corporate services provider. Our services include company formation, UK and offshore banking, asset protection, credit correction, trademarking and trusts. Other services include Internet services, mail forwarding, wills and probate. Turner Little’s vision is to offer the best possible service, together with market leading products.

Turner Little and its affiliates do not provide tax, legal or accounting advice. Material on this page has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.