The Dangers of Using a Terms and Conditions Template

Authors: Ian Aldridge and Zeinab Farhat, Progressive Legal

What are the dangers of using an Australian terms and conditions template?

For many small businesses who are in the process of starting up, costs are often a primary issue for consideration. As a result, small business owners may attempt to reduce costs by using template legal documents (i.e. terms and conditions) to exclude the need to engage an experienced commercial lawyer.  

However, this is an extremely risky exercise for various reasons. I know it may sound like a “lawyer selling his wares”, but from so much experience now seeing these dangerous documents floating around and trying to be used to protect clients properly, some of them aren’t even worth the paper they’re printed on!  

An example of one we saw was an important legal document being provided by a Thailand organisation for an Australian client with French Canadian references throughout the document, which was completely unfit for purpose. The client genuinely thought this was going to be good enough to cover them until they ran it past us. Thankfully they did!  

We also find that often even industry standard terms and conditions published by the particular institute don’t go far enough. The reason that is, is because they are trying to balance the competing interests of the business and the customers. They try and reach this “fair balance”, but they’re not acting in your best interests, they’re more acting in the best interests of the industry.  

On this page, we’ll consider the following: 

1. templates may be out-of-date and lack professional input;  
2. templates are not specifically tailored to the business or industry; 
3. use of copyrightable material (should copyright subsist);  
4. templates may cause more financial loss in the long run; and  
5. key takeaways. 

Templates may be out of date and lack of professional input 

Laws and regulations are constantly being amended. As a result, using template terms and conditions carry the risk of out-of-date information being used within the document.  

Further, where template terms and conditions are readily available online, it is often the case that the actual identity of the drafter is unknown. In such circumstances, this may also mean that there is a possibility that a lay person without legal training has actually drafted the document.

As terms and conditions serve as a contract between you and your customers/ clients, it is important that you understand and agree to every clause contained within the document.  

Templates are not specifically tailored to the business or industry  

An obvious risk with using template terms and conditions is that that they are not specifically tailored to your business. For example, you may require specific disclaimers to be incorporated into your terms that reflect key risks or areas that you wish to disclaim liability for.

By failing to address any specific or complex issues that you regularly face in your terms and conditions, you do yourself a considerable disservice by not reducing the ability of your clients to bring legal action against you.  

Your terms and conditions with your customers or clients serve the purpose of making sure that everything is clear in relation to the legal transaction and significantly reduces the risk of legal claims being made against the business. Remember that before a Tribunal or Court, the onus of proof really effectively reverses on you as a business owner to discharge your obligations first. You’re really coming from behind the 8 ball so to speak.

Consumers are a protected species. You must legally provide all the contractual documentation at or prior to purchase. If they don’t cover you for what you’re doing (which most precedents don’t), then you’re really playing Russian Roulette with your business.  

Use of copyrightable material (should copyright subsist) 

By obtaining a template online, you may think that you are able to use that for any purpose you see fit. However, various service providers may have their own terms and conditions in relation to the use of template material. For example, Canva has specific terms and conditions regarding the use of content on its site for commercial purposes.  

If you are actually using copyrightable material through the use of template terms and conditions, the owner of the material may be able to enforce his or her rights against you and obtain: 

1. a monetary award: either in the form of an account of profits or damages (subject to an election of the plaintiff of which monetary award it seeks); and  
2. other court orders: this includes an injunction, freezing orders or search orders.  

It is always best to “err on the side of caution” where using templates, and review the terms attached to the use of the template prior to using it for your business. Better yet, get a lawyer to draft them for you.  

Templates may cause more financial loss in the long run 

As noted, using a standard template for your terms and conditions exposes you and your business to more legal action potentially being brought against you. Legal action is far more costly than simply having the terms properly drafted in the first place.

Whilst a lawyer cannot guarantee that the terms and conditions may give rise to potential legal actions, a professional is far more experienced in considering and addressing, key risks.  

Key Takeaways  

Having specifically tailored terms and conditions is essential in order to ensure that you minimise legal liability, as well as protecting your own interests. Where you choose to have an experienced lawyer draft your terms and conditions, this will ensure you are positioned comfortably with respect to the reduction of legal risk.  

Sometimes insurance companies require tailored terms and conditions for the business insurance to be effective. I.e. some won’t cover you if you don’t have this done by a lawyer.  

If you use template terms and conditions, in almost all circumstances you run the risk of them not being enforceable, which at the end of the day is what it’s all about.  

They are most often the most important legal document with the lifeblood of your business. Your customers. If you use templates, you’re likely to end up having more disputes with your customers, end up in Court more and generally have more unhappy customers.  

Having templated terms and conditions are not a good look. Customers, suppliers etc do judge you on your legal documents. The better the legal documents are, the more professional your business looks. That certainly leads to more business. Think of it like an investment. It’s also great for business.  

If you require any terms and conditions or other commercial documentation for your business, make an enquiry below or contact our office at 1800 820 083. 

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