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The difference between a client agreement and terms and conditions and when you should use each

Updated: 23 December 2019

Terms and conditions and client agreements both have an important place in any business.

Knowing when to use each can help you can set clear expectations for your customers when they work with you.

So, terms and conditions - what are they?

Your terms and conditions are the general rules that your prospective or actual customers will abide by when accessing your offering. And really, 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.

Also, it helps to know that sometimes terms and conditions are interchangeably called terms of use,  and they can also be abbreviated as T&C or ToU.

So why exactly do you need terms and conditions?

To avoid any misunderstandings about your offerings, and to ensure that your prospective customers know what to expect before they do business with you. 

What usually goes into terms and conditions?

Here are some of the items that are usually covered in terms and conditions:

  • coverage - the parties covered by the terms and conditions e.g. your business, website visitors and customers;
  • the offerings covered by the terms and conditions; 
  • returns/refunds 
  • intellectual property
  • purchase and return processes (if you are selling online)
  • information and pricing error disclaimers
  • liability limitations (aka disclaimers) e.g. security breaches, service outages; and
  • suspension or termination - acceptable use policies. 

Where should I display the terms and conditions?

You can display terms and conditions anywhere.

Popular places to display terms and conditions include your website, app, software and as attachments to invoices (hard copies) or as links in in your invoices if sent as a soft copy.

If you are selling your offerings online, you can add a checkbox before your customers pay you online. 

A golden tip - always display your terms and conditions so your customers can see them before they make a purchase. 

Display your terms and conditions so that customers can see them before they make a purchase.

Why prepare a client agreement?

A client agreement can be customised for your customer's needs. 

You can customise pricing, delivery terms and other aspects of your offering. 

If you are concerned about setting up a bespoke client agreement for each client, in many instances, your lawyer can set up your contract so that key terms can be changed in a schedule only. Your schedule could look like this: 

Client Agreement Schedule

Client Agreement Schedule

What goes into a client agreement?

Here are the typical clauses in a client agreement: 

  • fees that you will be charging 
  • 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 to avoid court hassle)
  • termination 
  • intellectual Property 
  • confidentiality.

When to use each

Use terms and conditions when your rules won't vary between your customers. For example,  if you were selling low value goods online and the same rules apply to everyone purchasing.

You can use a client agreement for more complicated product sales,  where terms are likely to vary between your customers. For example, instances where you may offer different conditions for a purchase such as a loyalty or volume discount.

Which one?

So which one should you use - terms and conditions or a client agreement?

If your product is straight forward and available to all your customers on the same terms, you probably won’t need a client agreement, and terms and conditions will be enough. For example, t-shirts 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 consultancy.

Many clients have both terms and conditions and a client agreement, particularly if they have an online presence/sales channel and also offerings that are complex and varied for each client that may be sold offline. 

If in doubt, always get advice.

I wish you every success in your ventures!





Vivian Michael
 

Vivian Michael is a lawyer and founder of Michael Law Group. Vivian's mission is to deliver the best quality business legal services to entrepreneurs launching an Australian business, wherever they are in the globe.

Click Here to Leave a Comment Below 1 comments
Oliver - October 8, 2018

Great article, Vivian!

I’ve seen it a lot in my line of work that T’s & C’s get copy/pasted by a competitor.

Only recently I’m seeing that these are being more closely inspected by not only customers but Facebook and other service/subscription providers that are essential for startups.

While the cost of terms and conditions to be drawn up by a lawyer tends to be looked at as a bit of a waste of startup capital. As a digital marketer working with startup businesses through our Business Startup Package (https://3amideas.com.au/services/business-startup/) I can only recommend getting T’s & C’s done up by a professional lawyer and staying away from plagiarism.

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