7 Legal Essentials for Business Online: Part 5 – Website Terms and Conditions

If you’ve been following this series of articles you’ll be aware that terms and conditions have been mentioned a couple of times in different contexts, and there is good reason for that. Creating an online business allows you to interact with people all over the world. You no longer have the relative security of watching someone walk through the front door of your store and being able to make a judgment about how you want to behave with them, and how you might expect them to behave.

In an online environment the space is open and accessible 24/7 and you don’t necessarily get to check out your customers before they go to buy. The beauty of being online is that you get to set your own rules, within the context of the laws you chose to apply to your website.  How does this work in practice?

If your business is here in Australia you don’t really want to get involved in a dispute somewhere the other side of the world. You particularly don’t want to get dragged into a court proceeding that is in America, where ridiculous damages claims appear to be the norm. As an aside, did you know that New South Wales is the second most litigious state in the World, behind California?

To give yourself the best chance of avoiding being dragged overseas, the first thing you can do in your terms and conditions is identify which law will apply to your website and any transactions or interactions using your website. Usually this would be the law of the state or territory where your main business headquarters are situated.

Other benefits of writing your own terms and conditions are that you create the rules around removing people from your site. Facebook does this very well. Right now they are in the process of requiring every account holder to prove that they really are who they call themselves on their profile. So you if you call yourself ‘Santa Claus’, expect to be contacted and have to provide a copy of your driver’s licence or passport. In a business where fraud is a high risk (like banking), its handy to be able to make those rules.  Online, unless your terms and conditions offend local laws (eg. unfair terms under consumer law), customers have one choice, comply or don’t visit your website.

You can use terms and conditions to communicate a wide variety of things relevant to your online business, like how you do comply with consumer laws and what licences you make available for use of your website content.  You can also incorporate disclaimers, compliance statements relevant to your industry and provide a privacy policy consistent with the way you operate your business.  This is particularly important for small businesses who offer products (free report/ebook/competition entry) in exchange for personal information and those businesses that fall within the category of ‘health’ services.

Warning: Don’t just copy and paste terms and conditions. Overseas versions have provisions that don’t fit with Australian law and you can be completely exposing your business instead of protecting it.

If you do have current terms and conditions, congratulations! There aren’t many SMEs that do. The laws change, so be sure to get them reviewed at least every two years to remain up to date and protected.  For an audit of your existing website and terms, or to have something specifically tailored to match your business, contact the author.


About the author

Jeanette Jifkins is the founder and Principal of Onyx Online Law , an Australian based law firm with the focus of supporting businesses with an online presence.