8 Common Issues with Terms and Conditions Agreements

Last updated on 13 September 2019 by Nicole Olsen
8 Common Issues with Terms and Conditions Agreements

Your Terms and Conditions agreement (T&C) is both a social and a legal contract.

These agreements are an opportunity to protect your site, brand, and users, and you can use them strategically to set you apart from your competition. They're a place for you to tell users what you expect from them and even how they must behave when using your website or app. You can also share what they should or shouldn't expect from you so everyone is on the same page.

However, your T&C only helps you when it's free from the common issues that leave you unprotected or can even nullify the agreement altogether.

Some of these issues include leaving out important clauses, not seeking acceptance to your Terms and Conditions, or failing to mention your other legal policies, such as your Privacy Policy.

Are you making these common mistakes with your Terms and Conditions agreement? Keep reading to learn what not to do when creating your T&C and how to avoid making these mistakes.

1. Your Terms and Conditions is Incomplete

1. Your Terms and Conditions is Incomplete

Does your Terms and Conditions contain all the essential clauses needed to protect your business? Does it cover payment? User behavior? Other specifics you need?

Many businesses leave out critical clauses related to their operations including:

  • Limitation of liability
  • Restricted uses
  • Account termination
  • Payment and product warranties
  • Modification of the Terms & Conditions

These clauses protect you in the event that a user tries to misuse your site in any way.

Missing out on one can even nullify other clauses. Three examples of these include limitation of liability, restricted uses, and account termination.

A Limitation of liability clause places liability for illegal behavior squarely on the shoulders of users and requests that all people agree to use the site at their own risk.

Here's an example from Sony:

Sony Terms and Conditions: Disclaimer of Warranties and Damages, Limitation of Liability clause excerpt

These clauses tend to look very similar, with capital letters and boilerplate language disclaiming all warranties that can legally be disclaimed.

A Restricted uses clause directly informs users that they may not use your site illegally or improperly. Xbox lists its unlawful and prohibited uses here:

Xbox Terms of Use: No Unlawful or Prohibited Use clause

An Account termination clause allows you to shut down accounts that violate the terms in your T&C, or for any reason you deem appropriate.

Here's an example from Nintendo that allows the company to discontinue services without prior notice, for any time and for any reason:

Nintendo Terms of Use: Modifying and Terminating Services clause

Without these three clauses, you could wind up in hot water even when one person acts illegally. These clauses give you the freedom to identify illegal behavior and shut it down without requiring due process or the right to remedy on behalf of the user.

Before posting your Terms and Conditions, go through a checklist and ensure that you represented all of your business practices in your document.

2. You Don't Ask for Agreement

2. You Don't Ask for Agreement

Most people believe that no one really reads Terms and Conditions agreements, so why bother presenting them to users much less asking for consent to the agreement?

While studies show that few people "look" at Terms and Conditions agreements, much less read them, you still need to make them both easy to find and get consent to the agreement.

Why?

Because you need to do four basic things for your Terms to be enforceable:

  1. Notify users of the Terms
  2. Provide an opportunity for them to review the Terms
  3. Notify users how/when they agree to the Terms
  4. Require the user to take an action to show agreement to the Terms

Without acknowledgement from your visitors and users, you can't confirm that they agreed to your Terms and Conditions. The lack of confirmation makes it much more difficult to enforce them.

Until recently, many businesses relied on implied consent, or browsewrap. In other words, if a user visits your site or uses your service, they're thought to be automatically agreeing to your Terms and Conditions simply by being there.

Today, you should be asking explicitly for acceptance and having your users take some sort of action beyond simply being there.

The best way to ask for consent or agreement is to present the Terms before they sign up for your service or provide any data.

Here's how Hypothesis does this with a checkbox and statement that lets users know that by checking that box they're agreeing to the Terms of Service and other legal agreements:

Hypothesis sign-up form with checkbox to agree to Privacy Policy and Terms

You can (and should) also do it at other points, such as:

  • At checkout
  • Upon signing up for a newsletter

Any time you collect data or provide a service is a good time to present (or re-present) your Terms and Conditions.

Here's an example of using multiple checkboxes to get separate agreement for important Terms and legal agreements:

Living Clean checkout form with checkboxes for consent

Make sure to add a link to your Terms and Conditions at the same place you're asking users to agree to it. This helps prove that the users had access to the agreement at a relevant time.

3. Your T&C is Difficult to Read

3. Your T and C is Difficult to Read

Your Terms and Conditions needs to be easy for your users to read and understand. Without writing something the average person can comprehend, you can't expect them to comply with it. It also damages your consent or acknowledgement of the Terms and Conditions because it's difficult to consent to something you don't understand.

In Amazon's Conditions of Use, a License and Access clause is included. The clause is a long, solid block of text and is made up of long, complicated sentences:

Amazon Conditions of Use: License and Access clause

Twitter, however, makes its licensing clause much easier to both read and understand. Twitter largely uses plain language to explain exactly how the license works and what users are getting with it:

Twitter Terms of Service: Your License to Use - Intellectual Property clause

If you have any clauses that are long, dense and use complex language, break them down into smaller sections and use simpler terms and definitions that most people will be able to understand without needing to look up words, terms or business concepts.

4. You Haven't Updated Your T&C in Awhile

4. You Haven't Updated Your T and C in Awhile

To be effective, your Terms and Conditions needs to reflect your current business practices as they stand. You can't enforce an idea you have or a working practice you are considering - you must put it in writing.

One way to ensure your Terms and Conditions is both up-to-date and reflective of your current practices is to provide an "effective" date. Without that date, it's unclear when or if your terms are still effective and relevant.

For example, Surfholidays presents a Terms and Conditions statement with no effective date or any date at all:

Surfholidays Terms and Conditions: Payment clause

Because of this, users might have no idea whether the document was written last week, last year, or in the last decade. Even if the Terms are up-to-date, it can impact the efficacy of the document.

Instead of taking this approach, update your Terms and Conditions whenever you change your business or data practices and provide the date of the last update in a conspicuous place. Adding it near the title helps make the effective date clear and seen right away.

Spotify adds the full effective date at the top of the page:

Spotify Terms and Conditions of Use: Title and effective date

Be sure that in addition to updating your Terms and disclosing the date of the last update, you also include a clause that maintains your right to update or modify your Terms and Conditions. Here's how Spotify does this:

Spotify Terms and Conditions of Use: Changes to the Agreements clause

Letting your Terms go out of date won't be helpful for you or your users, so keep up with this important agreement and its content as your business or practices change.

5. You Hide Your Terms and Conditions

5. You Hide Your Terms and Conditions

Where do you post your Terms and Conditions?

Most people expect to find your Terms and Conditions agreement in your website footer along with all your other legal agreements and important information.

Why the footer? Because it follows the user across the site and makes it easily accessible from any and every page of the site.

Here's how the Hershey Company does this:

Hershey's website footer links

If you're looking for the agreement, you can find it wherever you are on the site.

Add your Terms and Conditions agreement links to other places as well, such as on a checkout page, account sign-up form or other places where your users should be aware of your specific requirements and terms.

6. You Don't Mention Your Privacy Policy

6. You Don't Mention Your Privacy Policy

Your Terms and Conditions agreement represents your expectations of customers and what they can expect from you. However, it's not the only document you need.

A Privacy Policy is also essential if you process any data. In fact, unlike a Terms and Conditions agreement, a Privacy Policy is legally required in most cases.

One common mistake is trying to combine your Privacy Policy with your Terms & Conditions. Another is to create separate documents and fail to note their relevance to each other by inter-linking each agreement.

Instead of making those mistakes, create two documents and link them together using both language and hyperlinks.

You undoubtedly cover data processing issues in your Terms and Conditions, so be sure to link to your Privacy Policy when relevant.

For example, Volkswagen references using its website to collect IP addresses from visitors computers and using a third-party database to map IP addresses to your zip code. Both of these are data processing activities, but nowhere in its Terms of Service does VW refer to its Privacy Policy.

Volkswagen Terms of Service: Zip Code Detection clause

A better example comes from Essie where it mentions its Privacy Policy right away at the start of its Terms and Conditions to inform users that the policy exists and that it works in tandem with the Terms of Use:

Essie Terms of Use: Intro with Privacy clause highlighted

By doing so, Essie acknowledges that data processing is a vital part of its user agreement and Terms and Conditions and thus creates stronger documents.

7. You Don't Note Your Location and Laws

7. You Don't Note Your Location and Laws

Where do you do business? What laws govern your business operations? Failing to let customers know what laws apply is a common mistake, particularly among smaller businesses.

Letting customers know what laws you follow gives them clarity on your operations. It promotes transparency and openness and informs them of their rights in the event they wish to sue.

If located in the United States, note both your state and the country in your Terms and Conditions. You can list it in a governing body clause, or elsewhere in the document, like in the introduction or preamble.

Airbnb has a global business and its interests are rather complicated. Airbnb has three potential jurisdictions, California (USA)., China, or Ireland:

Airbnb Terms of Service: Applicable Law and Jurisdiction clause

Users who live in the United States fall under California law where Airbnb maintains a global headquarters. Chinese users are under the directive of the Chinese government. Everyone else is subject to Irish law due to Airbnb's headquarters in Dublin, Ireland.

Be sure that your governing body clause reflects the complexity of your business and makes things clear for users - wherever they live, and wherever you operate from.

8. You Don't Protect Content

8. You Don't Protect Content

Intellectual property clauses are frequently left out or poorly written. The result: you don't take a strong enough stand against the theft of your, your users', or others' intellectual property and the ownership of content.

Forgetting any one of these parts of the clause can result in lawsuits.

Your intellectual property clause should make it clear who owns the intellectual property, when rights are exchanged, and how to report intellectual property theft (if required).

Pandora uses a helpful clause to explain what belongs to who and when:

Pandora Services Terms of Use: Intellectual Property clause

If you deal heavily in user-generated content, you might want to publish a full Intellectual Property Policy that lays the rules out in detail. But for most cases, a standard IP or copyright clause will work to protect everyone's rights.

Summary

These eight common mistakes in your Terms & Conditions impact both your customers and your business. They create weaknesses in your legal protections and present problems when things don't go according to plan.

Check your Terms and Conditions for these 8 mistakes to make sure your agreement is the best it can be for both your business interests and your users.

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Nicole Olsen

Legal writer.