Wondering if such an agreement is right for your online business? Check out our comprehensive guide to learn what they are, why you should have one, and what to include in yours. You can also download one of our FREE templates or use our terms and conditions generator to create one in minutes.
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Table of Contents
- What is a Terms and Conditions?
- Why Do You Need One?
- UK’s Consumer Rights Act 2015
- What to Include in a Terms & Conditions
- Special Considerations for Mobile Applications
- Clickwrap vs Browsewrap
- Samples of Terms and Conditions Agreements of Popular Companies
1. What is a Terms and Conditions?
You can (and should) have one for both your websites and your applications, but they don’t need to be separate. In fact, it is recommended that they are consistent across all platforms.
They can be used with the following platforms:
- Mobile Apps
- Ecommerce Marketplaces
- Facebook Apps
- Ecommerce Mobile Apps
- Desktop Apps
- SaaS Apps
Some apps have an EULA (End User license Agreement) in place of a Terms of Service, but it is not uncommon to have both. Many desktop apps, as well as applications with online service components, include both agreements.
2. Why Do You Need One?
1. Comply with laws and regulations
If you supply goods, digital content, or services to consumers in the UK, the Consumer Rights Act of 2015 requires websites and apps to have a fair and clear terms and conditions agreement. In the next section below, we go into detail on what the act requires you to include in your terms.
2. Maintain your rights
As the owner of the website or application, you have rights. However, in order to guarantee that they are enforceable and respected, you must have a legal document that is visible to the user.
You may not think of it this way, but your company logo, the content you’ve created, the images you’ve used, your website designs, and the features you’ve implemented are all your property. In fact, this is called intellectual property.
Inserting an intellectual property clause in your agreement will allow you to prevent copyright infringement and maintain ownership rights over your content.
The theft of intellectual property represents a serious threat to businesses.
It will also allow you to prevent abuses to your website or app. In the event that a user posts inappropriate content or abuses the website or app in some other way, you reserve the right to remove the content and prevent the user from accessing your content further. Additionally, if your site displays user content, you have the right to use that content on your site in any way that you decide.
3. Establish certainty and authority
Let’s assume for a moment that your site or application does not have a terms page. If users have questions, what are they to do? They will likely email you or your customer service team. The correspondence would take place over several emails, and the user would get an answer – but what happens the next time a user has the same question?
More emails, but the conversation would certainly go differently, thus allowing for a slightly different interpretation of the answer. This makes for not only a lack of certainty in the rules of your site or app, but also a burden on you or your customer service team.
Eventually, regardless of what kind of site or app you operate, users will have questions regarding the “fine print”. They will want to know things like what happens in the event of a pricing discrepancy, whether your products come with warranties, or if your company supports the third party links found on your site.
This is where a terms and conditions is essential. The pertinent information about your website or app is centralised and available for users to consult at all times. Issues that may arise are covered in the agreement – directly or indirectly. Although users may not always read it, its presence adds to the authority, and thus, the legitimacy of your site.
Having such an agreement will also help to manage user expectations, which will increase their confidence in your site. If, for example, your company provides a service that the user expects immediately, yet it takes a few days to initiate, you could have a dispute on your hands. However, if the timeline in which the service is provided is clearly outlined, you will have fewer disgruntled customers.
4. Legal challenge protection
ToS agreements containing pages of text and thousands of words are ubiquitous on the internet. Every major site and application out there has one, and there is good reason for this.
A clear T&C provides your company with protection in the event of legal challenges. Users that want to legally dispute an aspect of your site, application, or business will be met with resistance from their own lawyers, as they will advise against pursuing the claims in court. They know that the presence of clear, accessible provisions minimises the chances of the legal challenge being successful in court.
Additionally, as you consider the business related aspects to your site or app — pricing, shipping, costs, customer service — as a non-lawyer, you may not think about the legal side of running such a business. Limiting or disclaiming your liability in the event of disruptions or delays caused by force majeure may not come to mind. However, these things and more are very important to cover, and a legal agreement will protect your position.
It is also where you designate the governing law for your site or application. Governing law refers to which country’s laws will be used to interpret the agreement. Generally, you will choose the country in which your company resides and/or operates. Designating a governing law further protects your investments, as there will be less room for contention in the interpretation of the agreement.
3. UK’s Consumer Rights Act 2015
Coming into force on October 1, 2015, the Consumer Rights Act (CRA) consolidated numerous outdated consumer rights regulations in the UK into one overarching law. The goal of the CRA was to clarify the rules on contracts between consumers and businesses and update the laws to keep up with the digital age.
Regarding terms and conditions, the CRA requires businesses to have a fair and transparent agreement, prominently placed on their websites or apps. A term is deemed unfair if:
“…contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer.”
Based on the language above, the question of fairness relies heavily on how a judge interprets the subject matter of the contract and the circumstances under which it was agreed to. That’s why it is important that your terms are transparent. The clearer the language, the less room there is for misinterpretations. The CRA considers a terms agreement transparent if:
“…it is expressed in plain and intelligible language and it is legible.”
Additionally, the CRA outlines over a dozen terms that will almost always been seen as unfair to the consumer. Some of these terms include:
- “A term which has the object or effect of making an agreement binding on the consumer in a case where the provision of services by the trader is subject to a condition whose realisation depends on the trader’s will alone.”
- “A term which has the object or effect of requiring a consumer who fails to fulfil his obligations under the contract to pay a disproportionately high sum in compensation.”
- “A term which has the object or effect of enabling the trader to alter the terms of the contract unilaterally without a valid reason which is specified in the contract.”
For the full list, go to page 64 of the CRA.
Lastly, the CRA updated previous consumer rights laws to include a ‘prominence’ requirement. It states that a terms and conditions agreement should be:
“…brought to the consumer’s attention in such a way that the average customer – who is well informed, observant and circumspect – would be aware of the term.”
This means that simply stashing your terms in the footer of your website with a small font is no longer acceptable. The best way to feature your terms and other policies to ensure they grab your users’ attention is with a clickwrap agreement.
4. What to Include in a Terms & Conditions
A T&C includes a variety of rules and guidelines for how users access and use your website or mobile application. Here are some of the most common elements:
Many such agreements contain contact details to inform users how to contact companies with questions regarding policies or operations. This contact information is often different from that found on contact pages.
A Contribution Clause tells users about what rights they have to content that is created through the use of the website or application. These sections are only necessary if your website or application allows users to create content.
Dispute Resolution Clause
These agreements frequently contain arbitration clauses that specify how disputes will be resolved. Generally, these provisions include information about arbitration. Many companies also decide to include class action waivers, which prevent users of the company’s site or app to later become involved in class action lawsuits against the business.
Future Changes Clause
Your agreement should mention that changes may be made to the provisions. The method by which users will be notified of such changes and the period of notice that will be provided before these changes occur should also be discussed.
Intellectual Property Disclosure
These disclosures inform users of your intellectual property rights, including copyrights and trademarks of content, logos, and other protected marks and ideas. These clauses can be brief and simply state that the materials are owned by the company, as well as in what context future changes may occur.
A Limitations Clause informs users that by agreeing to use the services offered by your company, they also agree not to do certain things. This section is where you outline acceptable and unacceptable user behaviour. Some companies use complex limitations to prevent all harmful activity that could potentially occur on the site. In many cases, companies choose to use limitation clauses that limit liability for direct damages and state that individual parties (user and company) will not be liable for any indirect damages that may occur.
Your company should clearly state the prices of any products or services that are sold on the site, or where users can find these prices. Many companies will also use phrasing such as “as is” for items, and “as available” for services, as this will minimises the chances of a dispute. You should also list any appropriate shipping costs, acceptable payment methods, and how transactions will be handled.
Pricing disclosures may also include a clause that states what will happen in the event of a pricing discrepancy – such as one caused by an exploit or malfunction.
Prohibited Activity Policy
Your agreement should contain information prohibiting unlawful use of your website or application. These terms frequently list particular types of unlawful behaviour as well as broadly prohibiting illegal activity. In order to minimise liability, companies also often expressly state that the company is not responsible for content published through the platform by third parties.
Site Management Clause
Many companies include a Site Management Clause in order to place information about how the company operates a website or application so that users are aware of these functions. Many companies choose to use lengthy site management sections with descriptions of how long the company can monitor a website, as well as situations where the company can refuse access to individuals or existing users.
Termination provisions contain the various types of behaviour for which the access of users to a site can be terminated. Decisions to terminate a user’s account are usually left at the sole discretion of the company that owns the website or application. A vital part of many agreements, termination clauses help businesses prevent abuse of a site or application.
This clause informs users that your company is not responsible for any third-party websites to which your website or application links. In many cases, these provisions also notify users that they are solely responsible for reading the policies of third parties and third-party websites.
An increasing number of applications and websites allow users to create or register profiles. For companies that offer this service, it is critical to include a section in the agreement about user registration. Two of the most common components of this clause state that a user must register with the site or application, and users are responsible for preventing unauthorised use in order to limit liability for the company.
Some companies that manufacture or otherwise distribute products choose to place warranty clauses within their agreements. Companies who decide to do so should make sure to describe what exactly is warrantied and what type of replacement, repair, or refund the company offers for products under such warranties.
5. Special Considerations for Mobile Applications
There are many types of mobile applications that particularly benefit from Terms and Conditions agreements, including those that involve user-generated content and applications that are part of ecommerce stores. Other applications find that limiting undesired user activity can help control abuse of the application. The goal of these agreements for mobile applications should be to legally bind a user to these guidelines.
While some mobile applications use complex ToS agreements, other mobile applications utilise simpler ones. One of the deciding factors in how complicated an application’s agreement will be is the requirement of the online store through which the application is sold.
These agreements for mobile applications usually include clauses regarding:
- Limitations of Liability
- Intellectual Property Retention
- Ownership and Use of Content
- Prohibited Activity on the Application
- Retention of Ownership Rights
- Retention of Rights to Change the Application at Any Time
- Retention of the Right to Filter Content
6. Clickwrap vs Browsewrap
Many companies that place a terms and conditions on their websites, and especially in their mobile applications, utilise the “clickwrap method” where a user must manually accept the agreement in some way. Acceptance can be given in the form of a checkbox, button, user registration, or other means. Below, we can see Facebook’s use of the clickwrap method.
Another typical method, referred to as the “browsewrap method,” assumes that users agree to the policies by merely browsing the website or application. These agreements are usually hyperlinked to the main web page. Customers are not required to click anything to consent to these agreements. Below is an image of Yahoo!’s browsewrap policy.
In the UK and the EU, a lot more scrutiny is placed on browsewrap agreements because they do not require the user’s explicit consent. Therefore, the enforceability of these agreements heavily depends on how the website or app makes the user aware of their policies. With the CRA and upcoming General Data Protection Regulation (GDPR) however, the rules on communicating website policies and terms to users are becoming much more stringent, making browsewrap agreements less enforceable.
The decision whether to use a browsewrap or clickwrap policy rests solely with the business owner. As with all decisions regarding your business, this is one that should be made with careful consideration.
7. Examples of Terms and Conditions Agreements of Popular Companies
Any company that owns or operates a website or application should consider creating a terms of service agreement. Because these agreements contain so many different components, many businesses utilise unique elements within their legal pages.
Apple’s legal page, which is referred to as the ToU, can be found in the footer of the website.
The agreement also contains lengthy sections outlining its content and intellectual property ownership, user behaviour, and its right to terminate user access.
The company’s approach to the agreement is much more accessible than most, as it utilises a very user-friendly, Q&A format. A full PDF version of the agreement can also be downloaded.
The BBC’s termination clause is particularly thorough and lists a variety of reasons for which a user’s relationship with the business may be brought to an end.
Located at the bottom right of the main search page, Google’s Terms of Service agreement notes that it is constantly changing and improving its services and may add, remove, or even suspend one of its services at any time.
The company’s policy states that it will post notice of modification to the agreement 14 days before changes occur on the website.
Google’s legal policies are notoriously vague, allowing for a much shorter agreement than most on the web. This also allows for more wiggle room in the legal interpretation of the agreement.
Instagram’s agreement includes many elements that are unique to mobile applications, and can be found at the bottom of the homepage, and as part of the site’s Help centre.
In 2012, Instagram changed its policy to allow the site to sell content created by users without any compensation to the user. As a result of public outcry, this language has since been updated. Instagram’s policy also notes that users agree to not bring any claim against the company by using the site.
This company’s terms of service page is located at the bottom of the main page of Spotify’s website under the umbrella page “Legal”.
Spotify’s agreement contains a specific section regarding user guidelines. This section prohibits users from using Spotify to transfer a file when a user does not have the legal right to do so, selling a user account or playlist, and violating any applicable local restrictions on how Spotify may be used.
According to these clauses, Spotify is also allowed to terminate accounts without notice or refund to the user.
Twitter has separate Terms of Service agreements for users in the United States and users elsewhere. Both documents can be found in the website’s Help centre.
The company also utilises a clickwrap method, requiring users to accept its agreement before creating an account.
Twitter notes that the company is permitted to change its policies at any time. In 2009, it considerably changed the sections regarding its copyright license, but provided users only a few hours of notice before the modification occurred.
Youtube’s Terms and Conditions agreement states that by using any of its services you signify your agreement to its policies. It also retains the right to modify its documents at any time without guarantee of user notification.
The agreement contains many unique intellectual property clauses. Interestingly, it also grants a worldwide, non-exclusive, royalty-free license that can be used without limitation in any media format through media channels connected to Youtube.
It also states that the company may retain but not display, distribute, or perform copies of content that users either delete or have removed by Youtube.