Terms and Conditions

distribution agreement

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Businesses should invest in terms and conditions to establish legal protection, ensure clarity in communication, minimise risks, and set clear boundaries and guidelines. Your terms and conditions provide a framework for business-customer relationships, protect your interests and reduce the likelihood of disputes or legal issues.

As one of the highest rated Sydney-based commercial law firms, you can count on us for expert terms and conditions that are affordable, personable and reputable. Contact us today for a no-obligation free quote.

What are Terms and Conditions?

Terms and Conditions are a legally binding agreement between you and your customer or client by requiring that they accept your terms and conditions before engaging your services or purchasing your products.  

As well as making your terms of business clear to the customer or client before they engage your services, another advantage is that having one set of Terms and Conditions that apply to all customers and clients saves you the time and expense of drafting specific terms for each individual transaction.

They also give you the opportunity to incorporate terms favourable to your business in a setting that doesn’t encourage a great deal of negotiation. They also provide certainty that you’ll be trading on consistent terms that comply with your business’ policies and procedures. 

Why Do You Need Terms and Conditions With Your Customers or Clients? 

It’s essential that every business has legally drafted, clear and comprehensive terms and conditions that establish the terms of business upon which customers or clients purchase your products or engage your services.

They are vital to protect your business from a risk management perspective, but also from a customer/client perspective. Take the time and invest in making sure these terms and conditions are clear, in plain language and cover all of the responsibilities of both parties in the transaction.

If there’s anything that’s unclear, ambiguous, contradictory or legally unenforceable, it will almost in all cases go against the business in Court if a dispute were to arise. Consumers, like tenants and employees are a protected species. Most business owners think they are a protected species, but in fact it’s the opposite if a dispute goes to Court or before a Tribunal.

The onus is almost reversed on the business to prove the contractual relationship, that the relevant terms can’t be interpreted two ways. Our contract lawyers provide a range of contract review, drafting and dispute legal services. It makes sense for a lawyer to write terms and conditions.

How to Use Your Terms and Conditions?

It’s important to remember you must do all things necessary to bring all the contractual terms and conditions, including any separate policies, to the attention of the consumer, so that the agreement is sufficiently certain and complete and the parties’ rights and obligations can be identified and enforced. This was noted in the case of Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256 and Whitlock v Brew [1968] HCA 71.

You can achieve this by making reference to your Terms and Conditions on:

  • Quotations;
  • Websites, including a hyperlink to the terms on the checkout page before a customer purchases a product;
  • Invoices;
  • Brochures, catalogues or other publications. 

Note that while you can include your Terms and Conditions on invoices issued to customers or clients for good measure, still keep in mind that they will need to have been provided a copy of the Terms and Conditions prior to engaging your services or paying for your products.

13 Clauses to Consider in Terms and Conditions

Here’s just a few things to consider in your terms and conditions.

1. Customer Obligations

It’s recommended to include what you and your customers’ obligations are in relation to the products or services you provide. i.e. what are you promising to do and what do they need to do to make the transaction work.

For instance, if you’re providing a service that requires a customer to provide requested information or documentation, it should be noted that this should be provided in a timely manner and within any time frames that you require in order to provide the service. Progress payments to be made by certain dates, participation in calls, meetings, clear instructions etc.

When the client is clear about what is expected of them, it makes the whole process of carrying out your services a lot smoother.

2. Confidentiality

Where you provide a service that involves the exchange of confidential information between you and the client, or where only the client provides you with confidential information, it is strongly advisable to include a section on maintaining confidentiality.

This should include a definition of confidential information and state that the parties must ensure that all confidential information must be kept confidential and not disclosed to any 3rd party without express permission from the other party, unless required by law.

This will provide your clients/customers with the confidence knowing that you take their confidential information seriously and have measures in place to protect it.

3. Copyright and Trade Marks

It’s vital to make clients/customers aware that any materials or documents you provide while carrying out your services are subject to copyright under the Copyright Act, 1968, unless agreed otherwise. It’s also important to note that all material on your business’ website is subject to copyright and is not permitted to be copied or reproduced without prior written consent.

You should also state that any registered or unregistered trade marks, logos and service marks appearing on your website that denote your brand are owned by you and can’t be used in connection with any product or service that doesn’t belong to you and would likely cause confusion.

This makes it crystal clear to the customer or client that they can’t do whatever they want with your business’ copyright protected documents or registered or unregistered trade marks, especially not exploiting them for profit.

4. Termination

If an arrangement between you and the customer turns sour, you or the customer may consider terminating the services early.

It should be included in the terms and conditions the either party may terminate the services by providing the other party written notice of, say 7-14 days, and that any outstanding fees for the work already completed in the course of providing the service is payable.

Careful consideration needs to be given to this as what is required from your perspective and making sure that the balance is met for either party with usually the same amount of notice – to ensure that you don’t fall foul of the Unfair Contracts laws.

5. Refunds

The terms and conditions should acknowledge that customers possess certain rights under the Australian Consumer Law (ACL) and that goods and services are accompanied by implied guarantees that cannot be excluded.

Some consumer guarantees that apply to products are that the product is of acceptable quality, is safe, with no faults, and is fit for purpose. Guarantees that apply to services are that the service is provided with acceptable care and skill or technical knowledge is fit for the purpose intended, and is delivered in a reasonable time.

If your product or service breaches any of the consumer guarantees the customer is entitled to have the product refunded, repaired replaced or have the service cancelled.

It’s noted that if a customer simply changes their mind you are not obligated to provide a refund. However, to maintain a positive relationship with your customers, you may consider allowing refunds or exchanges if certain conditions are met, for example if the customer returns the item within a certain period of time, like 14 to 30 days, provides proof of purchase in the form of a receipt and provided that the product being returned is in re-saleable condition.

It’s recommended to include that nothing in the terms of business is intended to exclude or limit a customer’s rights under the ACL.

A well thought–out refund policy will save you a lot of hassle down the track and could save you from receiving customer complaints if they are clear on the circumstances in which they can seek a refund. Of course, individual circumstances can be taken into account and you may decide to assess refund requests on a case-by-case basis in order to encourage a positive customer relationship.

6. Payment Terms

You should include how customers are to pay for your products and services. Do you require an up-front payment for your services or are you paid in monthly instalments? Do you require full payment of a product before it is shipped?

These are the sorts of things to consider when drafting payment terms. You should specify which credit cards are accepted for online payments and whether payments are operated through a payment provider like Stripe, PayPal, Zipay or Afterpay etc. If you run an ecommerce site, consider how an ecommerce lawyer may be able to help you.

7. Disclaimers

Disclaimers are a great way reduce your liability and exposure to risk. They limit the scope of rights and obligations that may be exercised and enforced by parties to a contract.

Some examples include:

– The seller/service provider does not make any guarantees, warranties or representations about the products or services, except those implied by Australian Consumer Law;

– The seller/service provider cannot and does not make any guarantees about your ability to obtain results in connection with our products and services;

– None of the information provided in the supply or in connection with the services, purports to offer any legal, financial, business, information technology or other professional advice; and

– everything on the website is provided on an “as is” and “as available” basis.

These are examples of just a few. Essentially, if you don’t include these disclaimers and push as much of the legal liability as possible over to your clients/customers, you essentially are taking on that risk.

8. Dispute Resolution

Disputes with customers or clients are unfortunately, an inevitability. Including a dispute resolution clause in your Terms and Conditions is extremely beneficial as it establishes a process for resolving disputes that the parties are required to follow, often resulting in less clients/customers taking you to Court.

If there’s no mandatory process to follow when there’s a dispute, they can just run off immediately and file proceedings first. This establishes an agreed process that must be followed before any proceedings are filed.

This also saves the significant costs associated with defending Court proceedings, which can be very costly and distracting.

Again, if you don’t have these in your terms, you can’t enforce these rights.

Please let us know if you need any help with resolving a dispute.

9. Exclusivity

Depending on the nature of your business, it’s worth including in the terms and conditions whether you’re providing the products or services on an exclusive or non-exclusive basis. Most businesses operate on a non-exclusive basis to allow them to provide their products or services to multiple customers at a time. This makes the most economic sense.

10. Indemnity

Indemnities can be extremely powerful.

You should include wording stating that customer will compensate you for any harm, liability, or loss suffered by you arising out of the customer using, or attempting to use the information from your website, products, services, or for any breach of the terms and conditions.

11. Limiting Liability

Here you can specifically claw back any liabilities that they could ordinarily claim you have but only if they are very clear. You can even limit the amount of damages claimed to the value of the services they have received for example. These are an excellent way of protecting the business and mitigating risk and any damages that might be caused and claimed.

These limitation of liability clauses have even stopped claims, disputes and even litigation from occurring in the first place.

It’s highly recommended to include a section in the terms and conditions limiting the business’ liability. It should also state that, to the extent permitted under the ACL, your business is not liable for any loss or damage arising out of or related to the use of the website or the business’ products or services.

You should also include that in no event will you be liable, in contract, tort (including negligence) or otherwise, for any direct, indirect, special or consequential loss, damages or reliance in connection with the business’ products and services or its website.

12. Non-disparagement

We all know how common it is for a disgruntled customer to turn to social media or business review websites and provide a poor Google or Facebook review of a business.

The main benefit of a non-disparagement clause is that the customer is required to agree not to make any public statement which casts the business, or its products and services in a negative light, is adverse to the interests of the business or would damage its reputation.

That is, if they do – they are technically breaching the contract. So therefore, if there’s a breach of contract, then there is the potential for damages that arise from that breach.

Again, if it’s not in the contract, then you can’t enforce it.

13. Force Majeure

Force majeure clauses are relevant now more than ever, considering the current presence of a global pandemic.

A force majeure event is an unforeseeable event, such as a pandemic, that arises which is out of your reasonable control that prevents you from selling products or carrying out your business’ services. Other examples of force majeure events include strikes, terrorist attacks and natural disasters to name a few.

A force majeure clause is highly beneficial because it establishes that your business isn’t in breach of your Terms and Conditions or liable for any losses that your client or customer may suffer, as a result of your failure, inability or delay in delivering your products or services. It’s also useful because it sets out the process that your business can follow to notify clients or customers of the force majeure event’s impact on your business, inform them of the anticipated delay and confirm that the performance of the services will resume when the force majeure event has ceased.

There’s also a few ways you can word these clauses and push back some obligations for the provision of services or goods on certain grounds. These clauses have proven very handy in recent times. The amount of businesses that were caught out by not having these clauses meant that they weren’t able to hold monies and were obligated to provide refunds, in some circumstances that crippled their business.

Additional Clauses to Consider

It’s also a good idea to ensure the following is covered in your business’ Terms and Conditions:

– Binding on successors clause – this should be included in the Terms as it essentially means that the obligations of the client that engages your services will apply to their heirs, executors and permitted assigns.

– Sub-contracting – it’s advantageous to state that you’re free to subcontract any part of your services. This is especially if there are aspects of the services you’re not able to perform and would need to engage an independent contractor, having this clause saves you the trouble of seeking approval from the client beforehand.

– Applicable Law – This is sometimes overlooked, but if you’re providing products or services to a customer or client in different parts of Australia, or in another country, it’s in your business’ interest that the applicable Law is the law of the state or territory in which your business is based to ensure that your Terms and Conditions are interpreted in accordance with the Laws of that state or territory. Also, it’s imperative that you specify that the parties consent to the exclusive jurisdiction of your business’ state or territory. This is because if a client decided to sue your business, they would have to commence Court proceedings in your home state and not in theirs if they live in another location, which is an advantage.

– No Assignment – Generally, you would state that your client isn’t permitted to transfer or assign their rights or the benefits they receive under the Terms and Conditions. The reason for this is that you want to be clear who your client is and prevent confusion.

– Severability – It’s important to include a section on severability because if a dispute with a client goes to Court and it is deemed that a certain section of the Terms and Conditions is invalid then, without this clause this would also deem the remainder of the Terms and Conditions to be invalid as well, but a severability clause is beneficial as it ensures that the invalid section doesn’t affect the validity of the remainder of the Terms.

Key Takeaways

As you can see, there’s lots to consider.  

The end result though is extremely powerful. You have a legally sound and enforceable contract that looks professional.  

One thing most people forget is that people will judge you on your contractual documents. If they’re not worth the paper they’re printed on, then how will they view you in the transaction.  

It’s even stopped some clients from engaging with you in the first place! Especially when the contract is worth a bit of money.  

From a legal perspective, it’s imperative that customers/clients are aware of and understand your terms and conditions, what their obligations are and what you are not liable for.  

Terms and conditions are a great tool for mitigating risk and limiting liability.  

Terms and Conditions Cost

We can draft your terms and conditions (standard and non-complex) for fixed fees from $1,400 + GST, fully tailored for your business and drafted by a qualified terms and conditions lawyer. That includes taking all your instructions, drafting the comprehensive terms, discussing any further instructions necessary and a round of changes and finalisation. We look forward to assisting you.