8 Common Issues with Terms & Conditions of the Agreements

1.     Incomplete Terms & Conditions Leaving out critical clauses such as Limited liability, Payment terms, and Privacy Policy, one of the common slipups that often result in the contracting party (most of the times the businesses) to face financial and legal repercussions.   2.     Consent to Form an Agreement A customer may be in a hurry to make that online purchase for the commodity they dearly need, however, not taking consent from them before binding them into the T&Cs is a violation of the Contract law itself. An agreement is only formed when an offer is consented to that is explicitly accepted, thereby not asking the customer for forming the agreement make it unenforceable in the eyes of law. Consumer Protection Laws of Pakistan require a service provider/ trader to:   –       Notify users of the Terms –       Provide an opportunity for them to review the Terms –       Notify users how/when they agree to the Terms –       Require the user to take an action to show agreement to the Terms –       Acknowledgement from your visitors and users to confirm that they agreed to your Terms and Conditions.   Ideally, the terms and conditions may be presented, reviewed and signed up for the online visitor or customer’s acknowledgement before completing the payment process.   3.     Illegible T&Cs Law required the T&Cs to be clearly stated and readable such that a customer may easily understand the text and the requirements thereof. Use of small font size or placement of text in corners or spaces of the page where a consumer may not reasonably expect a term and condition to be written is strictly prohibited. State the T&Cs in short, easy to understand, simple language, and avoid the use of legal or business jargons for more effective application.   4.     Obsolete T&Cs Always state the T&Cs with the “effective date” and their term of validity. Keep an eye on the expiry of the validity period and update the T&C agreement accordingly. You may need to refresh certain terms such as payment and delivery terms, charges and taxes, or any changes in local laws from time to time. Always mark the changes in the terms and date of effectiveness of new business terms in a conspicuous manner.   5.     Hiding the T&Cs Usually T&Cs are placed at the footer of the webpage as it may be followed throughout the website and easily accessible to the consumer. However, you may also put links to T&Cs at multiple places such as on the page where you have displayed your product or at the page where the consumer places their order.   6.     Not Disclosing the Privacy Policy A customer provides their personal data to the service provider on the trust that this information may not be misused or shared onwards. Privacy terms are as important as the Payment terms, since the consumer data is a valuable commodity that in actuality a trader purchases in exchange of their product. It is an ethical and legal requirement to ensure that the data is protected from any breach. It is advised to make privacy terms a part of the main T&C agreement, or inter-linking them to maintain their relevance.   7.     Not Mentioning your Local Laws and Location Legally, laws of the place where the contract is formed is applied, that is location where the laws are agreed to. This would create much havoc as in case of online transactions, the customers are spread all over the world which would make it difficult for the trader to comply with different regional laws. Thereby, it is important to mention the place of business and the applicable laws of the land for clarity.   8.     Failure to Protect Intellectual Property Rights Intellectual Property (IP) Rights represent tremendous value to the business. Failure to protect IP rights effectively result in theft of your ideas, designs, branding and eventually hijacking one’s flourishing business and market space. The clauses shall clearly state who owns the IP rights during and after the termination of the agreement and to what extent the contracting party may be allowed to use the rights.   It is eminent that T&C agreements provide an opportunity to protect one’s business, brand, and users, and may be used strategically to set you apart from your competition. Not only these T&Cs clearly state the rights and obligations of both the trader/ service provider and the consumer, but also guide the consumer as to what to and what not to expect from a business transaction, thereby reducing legal complications. Avoiding the above 8 mistakes while drafting the T&C agreement is the key to a successful business transaction.