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What is a Terms and Conditions Agreement?

A Terms and Conditions agreement (also called a Terms of Service, Terms of Use, or simply Terms) is a legally binding agreement that allows you to protect your business and limit your liability. It does this by establishing your legal rights and limitations in written form.

Your Terms and Conditions agreement should lay out the rules you want your online shoppers to abide by if they want to browse your store or make purchases. Since your Terms and Conditions agreement is legally enforceable, both you and your customers can enforce the Terms established in the agreement.

A customer's agreement with your Terms and Conditions is sometimes implied, meaning you assume the customer agrees to your Terms by virtue of browsing your site, downloading information, purchasing products and otherwise interacting with your store. This type of implied consent is called a browsewrap agreement.

However, as privacy laws evolve to become more strict, browsewrap is being phased out and more and more ecommerce stores are requiring shoppers to tick a box or click a button to actively acknowledge and accept the Terms and Conditions to comply with laws. This type of agreement is called a clickwrap agreement, meaning the user must take action to confirm their consent to the agreement. It is the preferred and recommended method to best protect you and your online store from legal liability.

As an ecommerce site owner, you can enforce your Terms by refusing to allow an online shopper to browse your site or purchase products. The customer also can enforce the Terms by filing a lawsuit.

A Terms and Conditions agreement typically is organized to cover several important sections or clauses, depending on the nature of the business. In general, a good Terms and Conditions for an ecommerce store should contain the following clauses:

1. Limitations of liability
2. Intellectual property/trademark protection
3. Pricing and payment terms, including shipping, returns, exchanges and cancellations
4. Product information
5. Dispute resolution

Why Do Ecommerce Stores Need a Terms and Conditions Agreement?

If you own or operate an ecommerce store, it's a good idea to have a Terms and Conditions agreement posted on your website, though it's not required by law.

A good Terms and Conditions agreement allows you to legally define and enforce the rules your customers must follow to interact with and make purchases from your online store. In addition to this, the Terms and Conditions agreement also gives you a platform to limit your liability in case a product you sell is faulty, and to define what happens in the event of a customer dispute.

Here are a few reasons why it's a good idea to have a detailed Terms of Conditions agreement posted on your ecommerce website:

• It can protect you and your business from liability
• It can clarify your online store's checkout process
• It can protect your intellectual property and trademarks, and define acceptable use cases
• It can give a detailed account of how you intend on handling and resolving disputes
• It gives you a platform to explain your payment terms, delivery terms, product information, warranties, return/refund policy, order cancellation and so forth

If, for instance, you own or operate an ecommerce store that sells t-shirts and you don't want your customers to copy the unique designs and messages you print on the t-shirts, you could include a statement in your Terms and Conditions that establishes this. You also could provide a detailed account of the procedure you would follow if an individual were to violate those established intellectual property rights.

Here's an example from the UK T-Shirt Printing. The Ordering section of their Terms and Conditions agreement establishes that any designs produced by the company are part of their intellectual property and may not be used without prior written consent.