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<p>Properly drafted terms and conditions (T&amp;Cs) are often the last thing business owners want to think about. New businesses – understandably – want to jump straight into more exciting tasks, such as marketing and product development. Meanwhile, established businesses can feel too overwhelmed with operational matters to update an old set of terms.</p>
<p>But it would be a mistake for businesses to overlook the importance of T&amp;Cs. In 2021, alcoholic beverage company Diageo was <a href="https://www.lexology.com/library/detail.aspx?g=544583ef-a0a1-44cc-bcff-b911a14a0cda" target="_blank" rel="noopener">sued for £55 million</a> for an outdated and unclear licensing agreement. In 2010, an <a href="https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:62011CJ0012:EN:HTML" target="_blank" rel="noopener">oversight in Ryanair’s T&amp;Cs</a> meant hefty reimbursements to customers following the eruption of Eyjafjallajökull in Iceland and the volcanic ash cloud that followed, which Ryanair argued was an ‘extraordinary circumstance’, misunderstanding how T&amp;Cs align with other legal requirements.</p>
<p>It is important that consumers pay attention to T&amp;Cs as well. Infamously, in 2015 Finnish computer security expert Mikko Hyppönen inserted a <a href="https://www.theguardian.com/technology/2014/sep/29/londoners-wi-fi-security-herod-clause" target="_blank" rel="noopener">clause</a> into the T&amp;Cs of his company’s free WiFi hotspot in London that stated: ‘the recipient agreed to assign their first-born child to us for the duration of eternity.’</p>
<p>While it would contravene public policy to sell children in return for free services, this example, although never tested in the courts, does reveal the potential significance of T&amp;Cs. And just as consumers need to be aware of what they are agreeing to, businesses need well-drafted T&amp;Cs in place to protect them legally and financially.</p>
<h3>What are terms and conditions?</h3>
<p>Well-drafted and properly incorporated T&amp;Cs will form the basis of a legal contract between two parties, most often a business and its customers. They specify the terms of the relationship between the two parties, for example, regarding the goods or services being provided, expectations of when payment is required, and the apportionment of liability.</p>
<p>As with all contracts, it is best to have T&amp;Cs in writing, as this is evidence that a court can use in the event of any disputes. Further, consumer law requires specific information to be given to customers so that they are aware of their rights.</p>
<p>Terms also need to be properly incorporated into the contractual arrangements with the customer (i.e. clearly accepted by the customer). For example, in e-commerce, a customer may need to tick a box confirming that they accept the terms of the supplier. In business-to-business relationships, this can sometimes result in a ‘battle of the forms’ as both businesses try to force the other party to accept their own T&amp;Cs.</p>
<h3>The importance of robust terms and conditions</h3>
<p>T&amp;Cs are essential for the two parties involved (businesses on the one hand and consumers, clients, suppliers, partners, etc, on the other) to understand their rights, roles, and responsibilities. Under UK consumer rights law, companies must provide clear and accessible T&amp;Cs to ensure consumers are fully informed about the terms of their transactions.</p>
<p>This not only promotes transparency but also helps businesses comply with legal obligations. Because of this greater awareness and understanding, having T&amp;Cs in place can also help businesses avoid escalating legal costs in case of a complaint or dispute.</p>
<h4>Additional benefits</h4>
<p>With the correct T&amp;Cs in place, businesses can protect themselves from late payments from clients or customers going back on their word. They can also limit clients from using intellectual property, either wholly or partially, and can reduce legal risk. Importantly, T&amp;Cs can protect businesses from liability, non-payment and disputes.</p>
<p>T&amp;Cs can also help businesses protect confidential information, such as trade secrets, offering commercial benefits to the business as well as legal benefits. Even if a business is only selling a low-value good or service, a disagreement with a client can significantly disrupt the business, potentially incurring hefty financial and reputational costs, as well as interrupting key personnel from performing their main duties.</p>
<h3>What to include in terms and conditions</h3>
<p>T&amp;Cs should set out the agreed terms between parties and what will happen in the event of certain business-related circumstances, such as the business-client relationship ending or late payments.</p>
<p>When dealing with consumers, some details are legally required to be on a business’s T&amp;Cs, such as the business’s name and address. Limited companies must state their company number and the names of directors, among other details.</p>
<p><a href="https://www.legislation.gov.uk/ukpga/2015/15/contents" target="_blank" rel="noopener">The Consumer Rights Act 2015</a> obliges businesses that sell products to customers to have terms and conditions that help customers know exactly what they are agreeing to when making purchases. Additional terms may also need to be included when a business is selling goods or services remotely (e.g. online).</p>
<p>Businesses should be aware of the risk of including unfair contract terms, which may be unenforceable under the law. Many businesses unknowingly use T&amp;Cs that contain provisions deemed unfair or overly one-sided, potentially rendering them invalid and leaving the business exposed to legal disputes. As they are rendered potentially void, these terms fail to provide businesses with adequate protection or customers with any clarity. Businesses should seek legal advice when drafting terms and conditions to avoid such scenarios.</p>
<p>Specific features of a business’s T&amp;Cs will vary, but most will include the following:</p>
<ul>
<li>A clear definition of the business’s products or services</li>
<li>Payment terms, such as price, price increases and when payments are due</li>
<li>Provisions relating to the delivery of goods or services</li>
<li>Guarantees, warranties and disclaimers</li>
<li>The length of term of the agreement and notice for exiting the agreement, if relevant</li>
<li>Indemnity from clients</li>
<li>Intellectual property rights</li>
<li>Boilerplate clauses (e.g. how to deal with disputes)</li>
<li>Privacy policies</li>
<li>Compliance with UK consumer protection laws and laws that govern the contract</li>
</ul>
<p>&nbsp;</p>
<h3>Why bespoke terms and conditions are best</h3>
<p>T&amp;Cs cannot simply be copied and pasted from one business to another. Each business will have its own set of unique needs and procedures. No business should assume that another business’s needs are the same. It is also possible that a business, in copying T&amp;Cs from another business, ends up copying terms that are unenforceable or poorly drafted.</p>
<p>Businesses may have T&amp;Cs that have not been updated – while laws are constantly being updated, the same cannot always be said for all businesses’ terms. The business in question may even be from another jurisdiction, with entirely different laws.</p>
<p>Businesses selling goods may need to account for special considerations, such as UK consumer protection laws, including the statutory right for consumers to change their minds (e.g. request a refund). They may also need to consider data protection requirements (for more on this, read our article on <a href="https://www.linnearlegal.co.uk/resources/what-data-privacy-notice-why-important/">data privacy notices</a>).</p>
<p>Finally, using another business’s T&amp;Cs could constitute copyright infringement.</p>
<h3>Draft bespoke terms and conditions with expert guidance</h3>
<p>If you or your business require T&amp;Cs, <a href="https://www.linnearlegal.co.uk/get-in-touch/">we at Linnear Legal can help</a>. Our highly experienced commercial lawyers can assist with drafting bespoke T&amp;Cs, which are legally compliant and commercially focused to help your business succeed.</p>


Terms and conditions for SMEs

Ensure your business is protected with well-drafted terms and conditions. Learn why T&Cs matter and how they can safeguard your business from disputes.

Terms and conditions for SMEs | Linnear Legal

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