The difference between a client agreement and terms and conditions and when you should use each
Updated: 11 May 2023
Terms and conditions versus client agreements
Terms and conditions and client agreements both have an important place in any business.
Knowing when to use each can help you set clear expectations for your customers.
So, terms and conditions—what are they?
Terms and conditions are the general rules prospective or actual customers will abide by when buying goods or services from you. You can have terms and conditions that deal with any aspect of your business.
We're dealing with the most common type in this article—website terms and conditions and agreements.
So why do you need terms and conditions?
Your website needs terms and conditions to avoid any misunderstandings about what you are selling. It ensures potential customers know what to expect before they do business with you.
You also need them to comply with Australian consumer law. The Australian Consumer Competition Commission does regular checks to ensure websites comply with the law. If they find you do not, you could receive a fine.
What do website terms and conditions contain?
Your website terms and conditions should include the following:
- Cookies. Most sites use them. You need to let people know how you store the information collected, and how they can decline or disable them.
- User accounts. Let users know that if they set up an account on your website, they are responsible for providing accurate information.
- Returns, refunds and cancellations. This should outline the process for cancelling services or returning goods for a refund.
- Delivery of goods or services. This will outline the delivery policy for goods such as ‘dispatched within 3 – 5 days’. For services, delivery may be on the 1st of each month.
- Terminating access. This will explain that you have the right to terminate access to your account at any time, where deemed appropriate, without prior warning.
- Intellectual property. This should let users know that your business owns all intellectual property rights to the content on the website and visitors cannot copy or use it in any form without your prior permission.
- Liability limitations. These include things such as security breaches, service outages, third-party links, and so on.
- Warranty disclaimer. A warranty disclaimer lets visitors know who is responsible for the warranty of the goods and services they buy. A third party will often be responsible for warranties for goods.
- Accepting your terms. Explain that by continuing to use your website, users accept your terms and conditions.
- Jurisdiction. It is important to let users know the jurisdiction your website operates in, such as the country and state, so they know what legislation your website operates under.
Where should I display the terms and conditions?
You can display terms and conditions anywhere on your website.
Common places to display terms and conditions include your website, app, software, as attachments to invoices (hard copies) or a link in your invoice (soft copy). You may opt to have a checkbox as a part of the checkout process that says ‘Do you agree to the terms and conditions’ with a link to them to read.
A golden tip - always display your terms and conditions so your customers can see them before they make a purchase.
Help me prepare terms and conditions
Why prepare a client agreement?
Use customer agreements when the price, delivery terms and other aspects of delivering your goods or services vary. A good example of this, is grocery shopping online you want delivered.
You can customise client agreements to meet your customers’ needs. If you do not want to set up individual agreements for clients, your lawyer can set up the agreement so that you only need to change key items in a schedule. Your schedule can look like this.
What goes into a client agreement?
The following are the typical clauses in a client agreement:
- The fees you charge
- Service description (what you will deliver)
- Client responsibilities (e.g., give you timely instructions, provide certain materials to you)
- Disclaimers to limit your business's liability wherever legally possible
- Dispute resolution process should there be a problem
- Termination of the agreement
- Intellectual property rights
When to use each
Use terms and conditions when your rules do not vary from customer to customer. For example, if you are selling goods online and the same rules apply to everyone.
Use a client agreement for more complicated product sales, where terms are likely to vary between your customers. For example, where you offer a service rather than goods.
So which one should you use—terms and conditions or a client agreement?
If what you are selling is straightforward and available to all customers on the same terms, you do not need a client agreement. Your terms and conditions will be enough. For example, clothes or beauty products sold online.
If your product is more complicated, you may opt for terms and conditions and a client agreement. For example, professional services such as IT or marketing services.
Many clients have both terms and conditions and a client agreement, particularly if they sell to customers online and offline.
If in doubt, always get advice.
I wish you every success in your ventures!
Display your terms and conditions so that customers can see them before they make a purchase.