Doing Business Online? Make your Terms of Service Work!

Many businesses are going online, and with online transactions, new forms of contractual practices are coming into existence. In essence, the ingredients of a contract remain the same, meaning that there must be an offer from your business for a good or service, and the purchaser must agree to buy the good or service at the offered price, either by making the payment or by clicking “I agree” to submit an order.

However, these terms make up the bare bones of the buyer-seller relation. A variety of issues can be experienced in business related to online transactions, and there may be unanswered questions about how much your service will cover, what exact goods you are responsible for providing, the quality of service and the terms of any payments or refunds. All of these questions should be thoroughly addressed in your terms of service. We will get into the contents of a good terms and conditions document another time, however, before we get there, you should know how to ensure that your terms of business will be legally enforceable if displayed online.

Give your Customer Clear Notice

The main elements of a Contract involve an offer, an acceptance of an offer, some form of legal detriment or obligation agreed to by each party (which is also referred to as “consideration,” think the price paid or service/goods exchanged), the mutuality of an obligation (meaning both parties have obligations) and legal capacity (i.e. mental capacity and competency to enter into the deal). These are the general elements of a contract, which can vary from jurisdiction to jurisdiction.

You can assume that the principles of law will apply to your online transaction. To make sure that your terms and conditions displayed online are enforceable, you must make sure that you have covered these elements in your online dealings. That means that your offer must clearly communicate your terms. Furthermore, the customer must have a clear opportunity to accept the terms online. Thereafter, you must ensure that you can deliver the service or goods advertised to meet the obligations, within the timeframe specified. When it comes to the legal capacity of your customer, this is a little trickier to verify online, however, if you provide your customer with clear information, notice of the product, and clearly alert them before they make a purchase or agree to your terms, then you are probably acting in good faith and with transparency, which creates a stronger case for the legal validity of the transaction.

Many companies rely on housing their terms and conditions on a separate, lengthy web page, located on their website, and usually accessible via the website footer. The lengthy and complicated terms can seem unappealing to customers, and may damage the image of the products or services being sold. Therefore, many businesses decide to hide their terms on a separate webpage, away from any product pages. However, this is not a good practice for putting your customers on notice of your terms. The best practice is to include all pertinent information related to your terms on the actual page advertising your product. It may not be practical to show the full terms on the product page, however, you should definitely provide a link to them, which is made available to your customers, before they click “purchase.” If there is a box they can check which states “I agree” that is even better.

To be even safer, it is important to highlight the key terms related to your product or service on the selling page outright. This is to ensure absolute clarity, and avoid messy disputes down the line. For example, include any relevant disclaimers of liabilities, and the exact content of your products, or scope of services clearly on the product page itself. Don’t just rely on this information being present in your linked terms. For crucial terms, you don’t want to leave room for doubt. If the client makes an argument that the terms were not easy to access, were unclear, too long, inaccessible due to connectivity issues, or otherwise contradictory to any content displayed on the selling page, then you could face problems enforcing your terms and conditions in the future.

Therefore, the golden rule when selling online is clarity and transparency. Make sure you clearly notify your customers about your product or service, its limitations, and the limitations on the liabilities you are willing to assume when doing business online. There is more to online business of course, but these practices are key in your digital contractual compliance.

For a more detailed discussion on taking your business online, get in touch with us at info@borderlesscounsel.com. The above is not to be construed as legal advice under any circumstances, and only constitutes information and best practices for compliance .