Are terms and conditions legally binding?

Explainer
August 26, 2022
min

Almost all of us will been guilty of scrolling to the end of a webpage and ticking ‘Yes, I’ve read and agree to the terms and conditions’ without actually reading those Ts&Cs. 

But what does that mean in real life? Is that tickbox legally binding? The answer is “yes”… but not automatically. There are certain things that need to happen to make Ts&Cs enforceable in a court of law.

Let's explore what these things are in a bit more detail.

What are terms and conditions?

For the purposes of this article, the terms and conditions (Ts&Cs) we’re talking about are the ones you agree to on a website before you buy something from it. These are called usually called “terms of service”, “terms of use”, “user agreement”, or something along those lines.

In simple terms, these terms and conditions set out what customers can expect from a business when they buy from it, and what that business expects from its customers in return. They ensure all parties are aware of what their obligations to one another are and what happens if they fail to fulfill them.

These types of Ts&Cs come in two main flavors:

  • Browsewrap agreements: a notice on a website saying that if you use it, you’re agreeing to the terms and conditions. You don’t have to click a button specifically saying you agree –continuing to look around it constitutes acceptance
  • Clickwrap agreements: there’s a clue in the name here – clickwrap agreements involve clicking “yes”, “agree”, a tickbox, etc. to accept the terms and conditions before you can browse the website. 

Now let's move on and look at what terms and conditions typically cover.

What do terms and conditions include?

What a set of terms and conditions cover will obviously depend on the type of business that runs the website. After all, they are the terms and conditions for your particular product or service. However, there are a few things that terms and conditions are likely to include, regardless of the business they're for:

  • details of the products or services they provide
  • delivery times
  • payment terms, including what happens if a customer is late or doesn’t pay (e.g. interest)
  • guarantees or warranties
  • what happens if the business doesn’t do what it said it would (e.g. if it fails to deliver within a certain timeframe)
  • how either party can end the relationship, and if there are any penalties for this
  • the laws that govern the transaction

(Note that Ts&Cs aren’t the same thing as privacy policies. These have information about the type of personal data a website collects, and what it does with it. All business websites and apps in the UK, US and Canada – and other countries – must display a privacy policy.)

Why are terms and conditions important?

Terms and conditions are important since they ensure businesses deliver a good service and manage their customers' expectations. This is because terms and conditions are transparent about the rules and procedures around delivery and payments, for example. This means that there are no nasty surprises later down the line.

While businesses aren’t legally required to have written Ts&Cs, they can make life much easier. This type of legal document sets out the commercial terms a company offers to its customers. They also help both parties understand their duties, rights, roles and responsibilities under the contract. And they usually detail what will happen if something goes wrong, which can be vital in a dispute with a customer.

Are terms and conditions legally binding?

When you agree to these terms and conditions on a website, a contract is created between you and the company that owns that site. This means that the terms and conditions that you agreed to become legally binding.

However, for this new contract to be valid, it must include the essential elements of a contract. This usually means that there must have been an offer and acceptance, consideration, contractual capacity, and the intention to be legally bound.

However, there are also a few other criteria that determine whether or not a set of terms and conditions will be legally binding. Let's explore these in a bit more detail now.

When are terms and conditions legally binding?

If you find yourself in a dispute with a company claiming breach of contract because you agreed to these types of Ts&Cs, where do you stand legally? 

1. You must have accepted them

It might sound obvious, but you must have accepted the company’s terms and conditions to be bound by them. Businesses will also have to be able to prove this, for example with screenshots or “back-end records” that show your IP address, device details, etc. 

Ts&Cs must also be clearly presented and easy to find. So they can’t be tucked away on a webpage that isn’t immediately obvious. They must be up to date, and make it clear that they govern the way you use the site. As a business, clickwrap agreements that stop customers making a purchase without accepting the Ts&Cs are probably the safest bet. Browsewrap agreements just aren’t as cut and dried.

Companies must also let you know if they update or change their Ts&Cs. A clause which says they can do this without giving you notice could make them unenforceable – because they’re asking you to agree to a future contract which doesn’t yet exist.

2. They must be clear

The content of the Ts&Cs must be written in plain language and without legal jargon or confusing acronyms. If the terms and conditions are impossible to understand by your average Joe or Joanna, enforcing them is likely to be difficult. 

Some businesses include a short summary at the start to help customers understand exactly what they’re signing up to. They must make it clear that this doesn’t replace the full version of the Ts&Cs though.

3. They must be fair

Businesses can say pretty much whatever they want in their term and conditions. That doesn’t mean that every single clause is automatically enforceable just because you ticked “yes” though. 

For example, if an EU company has a clause in their Ts&Cs that says “If you buy a product from our website, we’ll only give you a refund if it’s faulty”, the courts would ignore this.

That’s because the EU Sale of Goods Directive says you get a guaranteed 14-day refund period for any goods you buy online. And in the UK, the Consumer Rights Act 2015 says that businesses can’t exclude liability for injuries caused by their negligence. So a clause saying “if our product explodes and you get hurt, you agree not to sue us” wouldn’t be enforceable in a British court.

These three things are important to keep in mind when drafting terms and conditions. After all, what's the point in having them if they aren't going to be enforceable when it matters most?

Need help drafting contracts?

If you need help drafting contracts, check out the following resources:

Alternatively, if you're a business that wants to streamline the contract creation process and reduce contract admin, fill in the form below to try Juro.

Juro is the all-in-one contract automation platform that enables all teams to streamline the creation, execution and management of routine contracts at scale. Get in touch with our specialists using the form below.

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