Understand your eCommerce Website Terms and Conditions

An eCommerce Website Terms and Conditions (also known as a Website Terms of Service) acts as a legal contract between you (the company) and the users who make use of your eCommerce website. Think of it as a document which sets out the basic ground rules- protecting your rights against users who may abuse your website and, ensuring that your customers grasp an understanding of your provided service or products. In this blog, we will give you the full rundown of what it takes to draft a Website Terms and Conditions and highlight a few of the most important clauses.

KYLE TORRINGTON

15 February 2021 • 15 MIN READ

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Understand eCommerce Website Terms and Conditions

What is an eCommerce website?

By definition, an eCommerce website is an online trading post that allows you to buy and sell products or services online. Once viewed by many as a subsidiary service offered by physical stores, e-commerce websites have rapidly evolved into leading companies and have quickly become a vital extension to even the most simple modern-day businesses. 

From fruit vendors to clothing startups, the internet is now a thriving, demand-driven marketplace for all businesses- no matter their size or products sold. The cyberspace market is not, however, a virtual Wild West and just as quickly as e-commerce sites have evolved, so have our laws and the demands of cautious consumers. 

As an online business owner, you need to be aware of both South Africa’s data privacy laws (which have recently become significantly more stringent) as well as a customer’s perception of your company. Having clear, understandable and legally-sound documentation on your website not only lowers your legal risk but it also increases the customers’ confidence in your business and determines your perceived business values.

There are now countless articles and studies supporting the belief that eCommerce is the future for many industries and without it, your business might easily be left behind. A common mistake we often see, however, and one that should be avoided, is frantically rushing into it. When setting up an eCommerce shop there are three important policies or legal steps that you need and should have displayed on your website.

Namely: A Website Terms and Conditions, a Returns Policy and a Privacy Policy.

What is a Website Terms and Conditions Policy?

A Terms and Conditions Policy is a document that details, amongst other things, how consumers may use the shop, your rights and responsibilities, that of the seller and the customers, what you are (and are not) liable for, and who customers can turn to if there’s an issue with a sale. It’s basically a set of rules that helps define a relationship between you and your customers. 

As a starting point, the fundamental basis of a set of Terms and Conditions is always the following:

  • What customers can expect of you: Which sets out how you provide your products and/or services;
  • What you expect of your clients: Which establishes certain rules for using your services and products;
  • Your website content: Which sets out the intellectual property rights to the content clients find on your website, and at its very simplest, records whether that is yours or owned by others; and
  • Conflict handling: How you address a problem or dispute with your consumers.

While it is not required by law that your eCommerce store has a set of Terms and Conditions, it is highly recommended that you do so. Typically we use Terms and Conditions, Terms of Service, Terms of Use, Website Disclaimer and T&C’s interchangeable.

Why do you need a Terms and Conditions Policy?

There are a number of reasons why you need a Terms and Conditions Policy. Here are some of the most important ones. 

As Website T&C’s function as a basic playbook for the relationship between you and your visitors, it is an easy way to objectively set your standards and manage expectations for all parties. Furthermore, a T&C’s establishes a form of legal protection for you, it sets rules to prevent site abuse, limit your liabilities and protect your intellectual property.

Here’s a great example of the importance of website T&C’s taken from our local clothing store, Mr Price. Within their Introduction Clause, they clearly highlight the importance of their T&C’s for potential customers regarding their stated provisions.

Not that you will want to, but you can read the full set of T&C’s here. It is a  comprehensive, somewhat lengthy document but its overall purpose is succinctly outlined in a few short bullet points. Their Terms and Conditions outline everyone’s rights and the rules to be followed. A few more in-detail reasons are as follows:

1. Legal Protection 

Terms and Conditions are legally enforceable rules, they allow you to set standards for how users interact with your site. While they protect consumers, they also protect you, the eCommerce store owner. The Terms and Conditions set out what you cannot be held responsible for, and what actions you’re entitled to take.

Terms and Conditions also set out the dispute resolution process if any legal issues do arise. Legal disputes cost a lot of time and money, and for the most part, can be easily avoided if you put in some pre-emptive groundwork. With a good Terms and Conditions Policy, you can save a lot in the long run by avoiding costly litigious processes. 

2.  Prevent Site Abuse

When the guidelines for your website are set out clearly in a policy, customers know what is acceptable and unacceptable when using your site and the consequences of non-compliance. Having a Terms and Conditions Policy allows you to take action against site abusers in the manners set out in the T&C’s.

3. Limit Liabilities

Your Terms and Conditions Policy can also assist in limiting your liability in many ways, including but not limited to, personal injury, loss of profits, computer malfunction, product misrepresentations and warranty issues. 

4.  Protect Your Property

Your website is filled with brand-related materials that are owned by your business, such as its logo, designs and the like. A Terms and Conditions Policy can be used to inform users that you are the owner of the intellectual property on your website and prohibit users from taking or using your branding.

5. Establish Trust

Terms and Conditions help your eCommerce business establish trust and transparency with customers by clearly outlining the rules of using your website. When you explain the legal basis on which your business runs, customers are less likely to have misunderstandings or mismatched expectations about your online store and are more likely to trust you. 

Basic contents of Terms and Conditions

Typically the contents are structured to include 15 important clauses as follows:

  1. The Introduction and Application Clause;
  2. Services Clause;
  3. Prohibited Uses and Actions;
  4. Information accuracy;
  5. Account Termination and Suspension;
  6. Third-Party Links;
  7. Shipping & Delivery;
  8. Intellectual Property;
  9. Payments;
  10. Limitation of Liabilities;
  11. Refunds and Returns;
  12. Amendments to the Policy;
  13. Jurisdiction & Dispute Resolution;
  14. Your Contact Information; and
  15. Active Consent to a Terms and Conditions.

The Introduction and Application Clause

An Introductory and Application Clause is normally contained in the first paragraph of your Terms and Conditions. 

From the first instance of your users reading the policy, they should know what the policy is about. A short introductory clause that states what the policy is, who the policy applies to and when it is triggered is important.

Both Takealot’s and Mr Price’s Terms and Conditions are a good example. There is a clear outline of what the policy is about and who it applies to.

This first section is not complex, but it’s contents are necessary.

Services Clause 

The Services clause is one of the most important clauses in your T&C’s, and sets out what your service offering is, and potentially how your charge for those services.

Put simply, with an eCommerce store that sells camping equipment you would, for example, a record that you are an eCommerce website which specialises in the sale of camping equipment throughout South Africa.

In this clause, it is not necessary to go into granular detail of your services, but rather provide a general overview of your services provided.

Prohibited Uses and Actions

Forbidding or preventing unlawful behaviour on your eCommerce website is essential and made possible by recording this in the Prohibited Uses and Actions Clause of your Terms and Conditions.

As an eCommerce shop, there is behaviour that is bound to be deemed unacceptable and it is important that you clarify what falls into the ambit of prohibited actions. It is up to you to decide what you will allow customers to do and not to do on your website, as this may have a direct effect on your reputation and the success of your webshop. 

There are, however, some standard behaviours that you should prohibit.

Prohibited actions usually involve violence, copying, circumventing the platform, crawling the platform, discriminatory or threatening actions. An example of this is included in Mr Price’s Clause 4.5 of their T’s & C’s. This clause should also detail the consequences of a user using the shop in a prohibited manner. 

Although this may seem like common knowledge or basic etiquette, it should be reiterated in writing along with your rights as the business owner to remove any content that you deem to be foul of these terms.

Information accuracy

Ensuring that the information displayed on your website is correct and without any mistake is what is known as Information accuracy. Information accuracy is important because your customers’ perception of your website or understanding of your products or services is based solely on the text or images you display, and as such this information must be accurate.

Mistakes do, however, happen and if you are selling many products on an eCommerce webshop, it is possible that sometimes your products and even your pricing can change before you update the information on the shop. It is very important that you stipulate that information can sometimes be inaccurate and change without notice.

This section should mention that despite your best efforts, on-site information might not be up-to-date and that certain information (e.g. prices, product descriptions, stock quantities) may change without notice.

Below is an extract from the Terms and Conditions of clothing retailer H&M and Takealot on information accuracy:

H&M clearly states that information on its site is not always up to date, and that information (including pricing) can change at any time. Similarly, Takealot makes it clear that they are not liable for any transactions made in error or incorrectly displayed prices. 

This is important, considering that 54% of consumers have returned items bought online due to complaints about colour.

Account Termination and Suspension

It is important to outline when, how and why a user can terminate their account or have it suspended or terminated by you, the shop owner. This clause should be kept as broad as possible to make provision for a wide range of situations that may give rise to termination or suspension. 

A good example is the Takealot Policy, wherein Takealot are typically entitled to close your account due to any behaviour that they do not want, including, preventing suspected fraud, abuse, multiple user profiles, taking advantage of coupons/promotions and the like. 

Third-Party Links

The third-party links clause explains the purpose of external links on your site, and that you’re not responsible for the content of sites to which you link. This is important as it limits your liability should any claim arise from a matter resulting from the use of an external link.  

The Takealot links clause records that any links pointing outside of its website are provided for the user’s convenience and that Takealot isn’t responsible for the quality, nature, and reliability of third-party content. The terms go on to state that the inclusion of third-party links does not imply endorsement by Takealot.

Shipping & Delivery

This clause is also known as the ‘Shipping Policy’ or “Shipping & Delivery Clause”. As the name suggests, this clause deals with the basic shipping and delivery terms of your online store. 

This is probably one of the most important clauses in the policy. Everyone wants to know when they can expect their goods. It is essential to outline your shipping and delivery terms, in which you record the time frames to fulfil orders, how costs are calculated, whether extra fees are applicable, and what your level of responsibility includes when third parties couriers, for example, are used. 

A shipping and delivery clause (such as Takealot’s below) should be as clear as possible, clearly stating how and when shipping and delivery is expected. It is also important in the case where goods may be damaged, delayed or do not arrive at all, that your policy stipulates what happens in these situations.

Often, you want to limit your liability by stating in this clause that once you have handed over the goods to the courier company if you are using one, that you no longer assume the risk of delivery.

Note that when doing business overseas, rules for returns or deliveries may be different from that of South Africa. Parts of the EU have legislation in place where the original sender is still considered the owner of the goods (and therefore liable for the risk of delivery) until it is delivered to the end-client.

Intellectual Property

Intellectual Property (IP), which generally includes copyrights, patents, trademarks and the like are the terms which best describe works of the mind to develop something original and new.

On any given website there are countless examples of IP creations, such as brand names, slogans, logos, patented products and the like. In today’s online world, your IP is an incredibly important asset that should be strategically managed.

It is important that you properly record what is your IP, and that of others, and further what can and cannot be done with your IP. A good example is that of Mr Price’s Intellectual Property clause. 

The laying down of IP ground rules will be extremely helpful if you ever find yourself in a situation where someone has used your site’s intellectual property, with your wishing to prohibit its use elsewhere.

Payments

In this clause you normally outline how payments are made when a customer purchases a product or service from your store.

Most importantly, however, one sets out the payment methods accepted by your webshop, such as debit card, credit card, EFT, eBucks and their vouchers.

The Takealot Terms and Conditions “Payment” clause below clearly defines what payment methods are accepted. 

This clause does not include actual pricing amounts, however. We would suggest that your pricing be recorded separately on your website, as this will allow for you to change your pricing as and when required without having to amend the Terms & Conditions.

Limitation of Liabilities

Mistakes and errors are bound to happen. Whether it’s a incorrectly described item or a system error, you want to make sure you state to what extent the business will be liable for any errors and mistakes. 

When it comes to purchases, you can’t always guarantee that every item you sell (or facilitate the sale of) will be flawless. If you sell items from third parties, this is especially important. For this reason, and among others, it is  important to indemnify your business and limit your liability. 

Takealot and Mr Price’s limitation of liability clauses are both great examples:

What is included and important in their clauses are that they are not liable for direct/indirect, incidental, special or consequential loss or damages when using their website, save for, in certain circumstances, where you might have been grossly negligent or exhibited willful misconduct.

Refunds and Returns

A Refunds and Returns Clause is typically a clause or set of clauses which sets out how and when your store will permit returns or refunds. 

It is advisable, however, like Takealot, to have a separate policy dealing with refunds and returns. 

Amendments to the Policy 

Amending your policy means making minor changes or additions to improve your text or change specific clauses and, with any growing business, is absolutely necessary. 

Your Terms and Conditions Policy should be updated regularly, but it is important that your users are aware of how often you will change the terms, what the process is to amending your terms, and how, such as with Mr Price, a user may discontinue the services if they are not happy with your updated policy.

Jurisdiction & Dispute Resolution

Your store’s Terms and Conditions are a proactive step to avoid legal disputes with your customers. However, in the event that a legal dispute does occur, it’s important to have a clear Dispute Resolution Clause, so any conflict can be resolved quickly and most importantly, professionally.

A Dispute Resolution Clause typically sets out the process through which disputes between you and your customers are resolved. Typically this might start with informal negotiations, and if that fails, mediation, and if that fails, through our courts,

Takealot provides a great example of this:

Your Contact Information

Let your users know how to contact you with any questions or concerns they may have. 

Here’s an example from Mr Price and Takealot. You’ll notice that both companies list as much contact information as possible: 

Active Consent to a Terms and Conditions

We strongly recommend that in order to ensure compliance with local laws, you obtain express consent to your Terms and Conditions from your users, as in the case of Mr Price’s signup process, by use of a physical “click” or action.

Express or active consent requires a user to complete some positive step, such as clicking a button or checking a box in order to agree to the Terms and Conditions, with the opportunity to read such Terms and Conditions. This is as opposed to deeming their acceptance of the Terms and Conditions simply by using the website, which is referred to as passive consent.

Many courts have, however, found that T’s & C’s presented in a passive consent manner do not create an enforceable agreement. 

Over to you.

These guidelines and examples should be taken into account when creating any eCommerce Terms of Service- whether you are selling products and/or providing your customers with a service. 

If you are, however, not absolutely comfortable with writing your own Terms and Conditions, we do not recommend that you go it alone. 

At Hello Contract we’ve created a simple way to create an automated customised eCommerce Terms and Conditions. We provide you with a step by step questionnaire to answer, and once you’ve entered your information, we take care of the legal stuff automatically in seconds. It’s simple. 

Check out our eCommerce Terms of Service, here.

A subscription service case study: Spotify

Both Takealot and Mr Price are e-commerce businesses which provide tangible products such as electronics and clothing apparel. This is not, however, the only e-commerce businesses model. 

Many online businesses provide only services to their customers- which are defined by any works that support a business but do not actually produce a tangible commodity. Examples of this could be online fitness tutorials, education platforms and media streaming websites.

And, although their offered services may vary substantially, what many of these businesses do have in common are subscription offerings- providing customers with the opportunity to gain different levels of access to services for a recurring fee.

Take Spotify for example. They are a leading music streaming service, offering subscriptions and receiving monthly payments from customers in return for access to advert-free music content.

If you are interested in subscription services, we suggest that you give their full T’s&C’s a read over, here. Otherwise, we have provided their key clauses below. 

Like most e-commerce stores, Spotify’s Terms and Conditions Policy is a comprehensive document that details how consumers may use their website, the rights and responsibilities of Spotify and their customers, who is liable for what, and what steps customers should take if there’s a problem with their received service. 

If you manage a subscription service, there are provisions in your Terms & Conditions that must be emphasized over and above the clauses in a standard T’s&C’s. Otherwise, you will lack the enforcement capabilities to secure payment and the appropriate use of your offered services.

Your Payment Clause, Restriction On Use and Subscription Termination and Suspension Clauses are key clauses which shall require modification. 

Subscription Payments

A standout reason that customs opt for subscriptions is that they get to try new products or gain access to a wide selection of content (such as in the case with Spotify) without spending a relatively large sum of money. 

For a time-based, recurring fee, they receive a new selection of goods or continued access to a service.

While you hope that most of your subscribers will read your monthly or annual fees carefully before signing up for your subscription, you still need to outline payment terms thoroughly in your Subscription Payments Clause. 

This is especially important if you use automatic renewal and the user must take active steps to halt the payments before a determined time to cancel their subscription.

Spotify, offers monthly-paid and free subscriptions. They explain these options in their Services Clause and go into detail about renewal, payments and billing- including how their renewal period is billed in their Payments Clause below: 

Prohibited Uses and Actions

Like the already covered T’s & C’s clause. Any events that involve violence, discrimination are obscene or threatening action in any shape or form should be explicitly prohibited on your website.   

There are, however, prohibited actions that are more unique to subscription services. For example, Spotify is a music streaming service, and as such, it makes sense for the company to create an environment which heavily protects the rights of the artists who upload their content onto the website. 

As such, Spotify, prohibits users from bypassing their streaming service, which would result in a loss of revenue for both the artist and Spotify- this includes the selling of user accounts, sharing your password or making use of another subscriber’s username and password. 

Subscription Termination and Suspension

Unlike an e-commerce store that sells tangible products which can be shipped, returned and refunded, subscribers may want to terminate their subscription because they can no longer afford it or, they simply no longer wish to be subscribed to your service. 

You must make it possible and clear for your customers to opt out of their subscription if they so wish to do so. If you make this too difficult for them, it will appear fraudulent and your company’s online image may be damaged due to bad reviews and poor word of mouth. 

Spotify explains the simple process of terminating their subscription and importantly, provides a helpful link directly to the appropriate webpage where subscribers may get in contact with a Spotify agent. 

Spotify also goes on to explain, in detail, that any payments for a partially completed subscription are not refundable and that their account will be terminated only at the end of the subscriber’s appropriate billing period. 

If you cancel unpaid subscriptions, that item does not need to go in this clause. Keep those provisions for your Payment Clause.

Read more

E-Commerce Websites – The Legal Document Essentials

Before starting an e-commerce website, there are a few vital aspects you need to understand in order to successfully (and legally) sell any products and/or services online. Let us walk you through the legal document necessities required for your e-commerce website.

Kyle photo 1 e1582657171533

KYLE TORRINGTON

15 APRIL 2020 • 10 MIN READ

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