Terms and Conditions – What, Why and How?

Terms and Conditions (hereinafter T&C’s) are also known as ‘Terms of Service’ or ‘Terms of Use’. T&C’s act as an agreement or a contract between the user and the owner of the company, website, application etc. Though insertion of T&C’s is not mandatory under law, it is advisable to include them to control liability, manage use, protect your intellectual property etc. Essentially, T&C’s establish the rights and responsibilities of contracting parties, to mitigate risk and avoid misunderstanding.

There are numerous templates available on the internet which give young entrepreneurs a fair idea on the outline which should be followed while drafting T&C’s, but these templates should be used with caution. T&C’s need to be unique and specific to your business or your platform. They have to be tailored to the needs of your business or else they will create confusion among your users or consumers. For instance, a blog or a content creation website may have to pay more attention to their clause on intellectual property than an online shopping website like ‘Amazon’. E-shopping platforms in addition to having a clause for intellectual property infringement may also have clauses to provide for the registration of an account, returns and refunds, payment terms etc. It should be further noted that not all E-shopping platforms have multiple sellers wherein apart from having detailed terms of use section for the consumers, a separate section for terms of sale is also included. Prime examples of such websites are Flipkart, Amazon etc.

The cardinal step to assure compliance of T&C is the acceptance of the agreement by the user or consumer. In context with the way websites and mobile applications work, T&C’s are usually introduced in two main forms. An entrepreneur can either opt for a ‘Browsewrap agreement’ or ‘Clickwrap agreement’. The concept behind both forms of the agreement is similar to ‘Shrink-wrap agreements’ wherein the consumer by opening the parcel containing the good agrees to the T&C set by the company. Browsewrap agreements are usually located at the bottom of the webpage as a hyperlink which further redirects the user to a separate legal page. But in a clickwrap agreement the user has to either check or toggle the ‘I agree’ checkbox or click a button after the pop-up notice is provided by the platform.

Though T&C’ should be curated while keeping in mind the business goals of the company, website etc., there are certain basic clauses which must be included by all. These clauses are listed down below;

1) Introduction and acceptance of terms: This clause introduces the different parties involved in the agreement and it is at this stage the acceptance is given by the user, by either checking a toggle or by using the platform itself.

2) Reference to Privacy Policy: As T&C’s for the basic set of rules to which a user abides, so it will be a good practice to integrate supplementary policies and legal agreements to the same legal document. For instance, it can be drafted as ‘By using our website you agree to our Privacy Policy’ or ‘By creating an account on our website you agree to the T&C and Privacy policy’.

3) Authorized user clause: This clause is only necessary if you want limited access to your content. In other words, this clause lays down the eligibility criteria of the users in terms of age, jurisdiction etc.

4) Intellectual Property Rights: this clause decided the ownership of the content posted on the platform. In addition to the content, the Logo, Name etc. can be protected under this clause from any illegal or unauthorized use. It should be noted that in a situation where the website or an application depends upon user-generated content, then ownership of it may or may not be in favour of the company. If it is former, then a separate clause related to the content should be added to clarify risk allocation.

5) Applicable Law: As the name suggests, this clause informs the user about the jurisdiction and the governing law in case disputes and/or infringement of legal terms listed in the agreement.

6) Dispute Resolution: This clause can either be amalgamated with the clause on ‘Applicable Law’ or written separately. The clause informs the user about the mode of dispute resolution which can be resorted to in case of an infringement. The owner of the platform can either resort to Litigation, Arbitration or Mediation after doing a cost-benefit analysis of all and choosing the one most suitable for them.

7) Changes to Terms: Many e-platforms prefer to inform their users in case of any modification is made to their T&C’s via sending an email or a notification. These e-platforms reserves the right to make a change to their T&C’s, which needs to be announced by adding this clause to their agreement to avoid liability.

8) Termination of Use: This clause is mainly included to reduce liability. The termination clause explains the procedure of voluntarily withdrawing from the services provided by the website or application. It also includes certain circumstances where the owner of the platform can unilaterally terminate a user’s account.

Listed above are some general clauses which should be kept in mind while drafting T&C’s for your business. But they are not exhaustive, as all businesses have unique needs and goals which ought to be accommodated and tailored accordingly into the agreement. The language used to draft the agreement should be clear and concise, having a polite tone to it. Refrain from using any legal jargon. The T&C’s must be well structured and logical.