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How do I write terms and conditions for an online store?

When you sell products online, your terms and conditions need to be clear to avoid future issues and misunderstandings with customers. LegalVision lawyer, Blythe Dingwall, outlines why your online store's terms and conditions matter and what you should include when you draft them. This article was originally published by LegalVision.

At a glance

Some of the key clauses in your terms and conditions will be:

  • payment;
  • delivery;
  • refunds; 
  • returns; and 
  • warranties.

If you run an online store to sell your products, you need to have terms and conditions that clearly set out:

  • what customers can expect from your products; 
  • how your delivery processes work; and 
  • what they can expect in case something goes wrong. 

Having properly drafted terms and conditions can provide clarity for both your customers and your business. You also have obligations under the Australian Consumer Law (ACL) which your terms and conditions must comply with. This article will discuss the key terms to include in your terms and conditions for businesses selling products online. 

How Can Customers Accept the Conditions?

You do not need an actual signature from your customers for them to accept your terms and conditions. Most online businesses at checkout will have a separate ‘checkbox’ which allows customers to accept or reject your terms and conditions. Here, you can include a hyperlink to your terms and conditions.  

When building your website, you should ask your developer to include this checkbox at the point of checkout.

Payment

It used to be the case that upfront payment via credit card was the only option for customers looking to purchase products online. Now, however, there are a host of third-party providers that customers can use to pay you. 

These include, for example: 

  • Paypal; 
  • Afterpay; and 
  • Stripe. 

These third parties will provide guidance on how you can incorporate information about these businesses in your terms and conditions. If you create custom products for your clients, you may also wish to consider taking an upfront deposit. 

Delivery

Issues with delivery can be some of the most frustrating for customers and can result in negative reviews and refund requests. You can build a great reputation if you are able to arrange fast and efficient delivery. Your terms and conditions should clearly set what your client should expect in the delivery process. Here, you need to outline: 

  • what regions you deliver to; 
  • whether you use a third-party delivery company; 
  • your delivery timelines; 
  • who is responsible for damage to the products during transit; and 
  • when ownership of the products passes to the customers. 

There is no right way to arrange your delivery process, but making sure you set customer expectations can be crucial to a positive customer experience. 

You should clearly set out the procedure customers need to follow if they wish to change their order after payment. If the customer accidentally inputs the wrong address or needs to add something to their order, you should outline whether they have a window of time to edit these details before you dispatch the order. 

A good set of terms and conditions will also make sure to limit your legal responsibility for issues arising after delivery. 

For example, if a customer has provided consent to leave a parcel on their front door, and the parcel goes missing, your business should not be responsible for replacing that parcel.

Refunds and Returns

Damaged or Defective Products

The Australian Consumer Law (ACL) contains several consumer rights and guarantees that you cannot exclude in your terms and conditions. You need to make sure that your terms and conditions clearly state that the customer has rights under the ACL if your goods do not meet the consumer guarantees. This includes rights to a:  

  • repair;  
  • replacement; or 
  • refund. 

One of the key consumer guarantees to keep in mind is that the goods must be of acceptable quality. 

For example, if you sell shoes and the stitching comes apart the first time your customer wears it, you will need to repair, replace, or refund the shoes. 

Your goods must also be fit for a particular purpose. 

For example, if a customer specifically tells you that they need a watch that they can wear while diving, and the watch you sell stops working as soon as they go underwater, it was not fit for purpose. The customer is entitled to a repair, replacement, or refund.  

Another guarantee is your products must match the samples you provided.  

For example, if you sell t-shirts online, and the image you have on the site shows them as pink when they are really red, you will need to refund or replace the t-shirt if the customer requests. 

If the Customer Changes Their Mind

There is no right under the ACL for a customer to return a product if they have simply changed their mind. Whether you offer change-of-mind returns or not, make sure that you outline this in your terms and conditions. 

If you do offer change-of-mind returns, you need to specify the process to obtain a refund or replacement. This process might set out that the:  

  • customer needs to have proof of purchase; 
  • products have not been used, and  
  • customer is responsible for the shipping costs associated with the refund. 

Warranties

There are also mandatory warranties and guarantees under the ACL that you just provide to customers. Some businesses will provide additional warranties that go over and above their obligations under the ACL.  

For example, you could provide a lifetime guarantee that the goods will be of a certain quality. 

If you offer warranties, you must have specific wording in your terms and conditions that informs the consumer of these rights under the ACL. This wording is known as ‘mandatory wording’ and penalties apply if you fail to include it. 

If you provide a separate warranty against defects, your terms and conditions need to detail: 

  • what your warranty covers; 
  • how long the warranty is for; and 
  • what the customer needs to do to claim the warranty. 

For example, the customer may need to send the product back to you with details of the defect and proof of their purchase.

Our partner, LegalVision, can help your small business with affordable, ongoing legal support. Find out how you can access a free 30-minute strategy session and 1-month membership to on-demand legal assistance.

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The information in this post is provided for general information only and does not take into account your personal situation. Nothing contained in this post constitutes advice or an endorsement or recommendation of any kind by Prospa. Any links to third party websites are strictly for informational purposes only. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from financial, legal and taxation advisors. Although every effort has been made to verify the accuracy of the information as at the date of publication, Prospa, its officers, employees and agents disclaim all liability (except for any liability which by law cannot be excluded), for any error, inaccuracy, or omission from the information for any reason, including due to the passage of time, or any loss or damage suffered by any person directly or indirectly through relying on this information.

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