Even with rapid industry growth and mass adoption, e-commerce businesses face different challenges than traditional brick-and-mortar companies. An e-commerce company must take a multidisciplinary approach, confronting issues on day one that physical storefronts might not worry about for years—from technology and privacy law to interstate commerce. While terms & conditions are not unique to e-commerce, some of the considerations are and terms should be drafted to protect the company from the unique marketplace in which they operate.
About the Author:
Connor Slivocka is an e-commerce/business lawyer at AEGIS Law – a leading e-commerce law firm with clients at every stage of growth. Having represented multiple successful e-commerce brands from formation to exit, he knows what makes e-commerce stores thrive in an ever-changing market. He can be reached at cslivocka@aegislaw.com.
Below are a few key points to consider when thinking through terms & conditions that set the stage for a successful launch and beyond.
Enforceability
Courts have sometimes been reluctant to enforce terms & conditions because the purchaser may not have had the opportunity to negotiate the terms. Put another way, the terms & conditions are not enforceable because there is no mutual agreement. Brands have been able to bolster their argument for enforceability by doing the following:
- Using clear and concise language on the website alerting customers to the terms & conditions and that the proposed sale is subject to those terms;
- Requiring purchaser to click a “I Agree” or a similar button; and
- Ensuring the terms contain language that explicitly says that by placing an order on the website they agree to its terms & conditions.
Taking these steps ensures customers are informed and affirmatively accept to the provisions of the terms & conditions.
Pricing
Your pricing will change over time, whether it goes up because of increasing labor or materials, or down when you discover a more efficient way of doing things – in any event, terms & conditions need to account for variance.
Terms & conditions should include language that allows for pricing to change without notice, but ensures that any price changes do not apply to already ordered items. However, we are all humans and errors do happen. Terms & conditions should reflect that we make mistakes with a simple clause reflecting that the business may make errors but reserves the right to correct such errors and/or cancel any orders.
Shipping & Returns
Cost
Terms & conditions should clearly state a brand’s shipping policies.
Shipping costs continue to rise as more and more people enter the e-commerce market. It’s up to each business owner to determine what, if any, shipping concessions will be given to their customers. In any case, a sound shipping policy should be written broadly to allow for shipping costs to be decided on a product-by-product basis.
Shipping Risk
Depending on the product, brands may want to take on the risk of delivery (or non-delivery) until it reaches their customer’s door (this is standard). In other instances, a brand may want its customer to be responsible for the product once it reaches the delivery service. In either case, its important to clearly state the company’s shipping policies, who bears the risk of delivery and that the company will not be liable for any delays in shipping beyond its control. Keep in mind that carriers will also likely provide some protection if a package is mishandled, lost or stolen, and insurance is always a good option.
Returns
Returns are inevitable – unless there not. Depending on the product, a brand may want to accept returns after a certain number of days after it was shipped or delivered to the customer. If certain items can’t be returned without a chance for it to be resold (for instance, a custom made mug), the return policy for that product should clearly labeled as “non-returnable” or “final sale” so that there are no questions on the policy. Keep in mind, however, that brands should refund, replace or fix any items that are lost, or arrive damaged or inoperable.
Additionally, the return policy should clearly state who is responsible for return shipping costs. Some brands accept free returns to build trust, while others simply cannot afford to. In any case, it’s important to state the policy and be amenable to changing circumstances.
Warranties
Re-sellers of already manufactured goods (for instance, drop shipping companies) may not need to provide a warranty (in some jurisdictions). Generally, manufacturers will carry a manufacturer’s warranty for an end user ordinary use. However, businesses should check each of their manufacturers warranties as part of sound supply chain management and before selling their products to customers.
Additionally, most manufacturer warranties can be passed along to customers. The terms & conditions should clearly state what warranty the brand is providing for its products, if any, and 1) disclose the manufacturer’s warranty, if any; and 2) disclaim any other warranty (provided there is additional language to capture jurisdictions where the re-seller, as the supplier, cannot disclaim a warranty). Further, it is common for brands to offer limited warranties to cover some, but not all, issues with its product(s) in a given time period.
Conclusion
The Terms & Conditions are designed to protect a business during and after the sale, and include, but are not limited to, the aforementioned provisions, as well as limitations on liability, governing law, notice requirements, and other standard terms that should be fine-tuned to meet needs of the business. Each company should identify its own business risks and consult an attorney prior to posting its terms & conditions to its website.
DISCLAIMER
This article is not a substitute for professional legal advice and is it recommended you seek your own counsel’s advice for any legal questions. This article does not create an attorney-client relationship, nor is it a solicitation to offer legal advice.
