Key Takeaways

  • Before drafting terms and conditions, meet internally and anticipate negotiation points.
  • Essential clauses include dispute resolution, payment terms, service delivery, breach of contract, and unforeseen events.
  • Additional clauses like limitation of liability, intellectual property rights, and user obligations should be included.
  • Terms must be customized to your specific business model and jurisdiction.
  • Clear, concise, and easily accessible terms strengthen enforceability.

Knowing how to draft terms and conditions is an important component in any contract. The terms and conditions are those statements made in a contract that identify the purpose of the contract, what services are being performed and/or what products are being sold, and the overall duties and responsibilities of both parties involved.

Before Writing the Terms and Conditions

Before you write the terms and conditions, you should first meet with other individuals within your own company before sitting down and discussing important items with the other party. That way, you’ll be able to draft up some key topics for discussion when entering the negotiating phase of the contract. Keep in mind that the other party might have different goals and objectives, so the they might not agree to all of your terms and conditions, particularly if such terms are more favorable to you.

Think about what the other party might come back with; individuals from the other party will likely meet to discuss their own objectives for the contract and what terms and provisions they want to see in the agreement. Therefore, you might be met with some disagreement as to any one or more of the terms and provisions that you want to include.

Key Considerations Before Drafting Terms

Before beginning to draft your terms and conditions, consider the following factors to ensure that the document will effectively protect your business interests:

  • Identify Your Business Model: Terms should reflect whether you offer products, services, digital content, subscriptions, or other types of business models​​.
  • Understand Your Audience: The complexity of your terms may vary depending on whether your customers are businesses (B2B) or individual consumers (B2C)​.
  • Consider Applicable Laws: Ensure compliance with local, state, national, and international laws if applicable, especially for online businesses​​.
  • Plan for Enforcement: Think about how the terms will be communicated and accepted by users (e.g., "clickwrap" agreements requiring user acceptance are more enforceable than simply posting terms)​.
  • Prepare for Flexibility: Build in the ability to update the terms, with notice provisions explaining how customers will be informed of changes​​.

Writing the Terms & Conditions

The terms and conditions should set out the agreed upon terms between the parties, including the following:

1.What happens in the event of a legal dispute

2.What happens if the services to be done are not completed by the due date identified in the contract

3.What happens if payment is not made according to the terms and provisions of the contract

4.What happens if either party doesn’t abide by their contractual duties in any other way

5.What happens if an unforeseen circumstance arises

Generally, the contract will identify what happens if a legal dispute arises. It might establish the venue for where the case should be heard. This is common for large entities entering into contracts with consumers. There is usually a legal dispute clause indicating that should a consumer wish to bring a legal suit against the company, the parties will first engage in legal dispute resolution, which is a form of alternate dispute resolution, before taking the case to court. This is done in an effort to minimize time spent litigating a case, along with the hefty fees associated with it. Therefore, it would be beneficial for the parties to include such a term or provision identifying how the legal dispute will be heard, and where it will be heard. It should also include who will be responsible for hiring a mediator or arbitrator, depending on whether the parties choose to enter mediation or arbitration as a form of alternate dispute resolution.

If the services aren’t completed by the due date identified in the contract, the parties should indicate what happens next. It should include language stating that the party failing to provide the services by the due date must communicate to the other party why the services are not complete, providing a reasonable explanation for the delay. Thereafter, the parties should rectify the problem by amending the completion date, otherwise, one of the parties might be in breach of the contract.

If payments are not made according to the terms and conditions in the contract, the parties must communicate with one another to rectify the problem. Otherwise, similar to the issue identified above, one of the parties will be in breach of the contract.

If either party fails to abide by their contractual duties and obligations under the contract for any other reason, they will be considered in breach of the contract. This means that the victim party can bring a legal suit against the breaching party for the breach. In order to prevent a breach of contract claim, it is crucial for the parties to communicate with one another on an ongoing basis to ensure consistency and full adherence to the contract.

If, due to unforeseen circumstances, the parties cannot adhere to the contract, this might be a valid defense on the part of the breaching party. For example, assume that Company A hired Company B to paint the exterior of its building. Throughout the time of service, however, there is a hurricane, causing a significant delay on the part of Company B to finish the job on time. Company A will have a very difficult time bringing a breach of contract claim against Company B, specifically due to the unforeseen circumstances.

Important Clauses to Include in Your Terms and Conditions

When learning how to write terms and conditions, certain clauses are considered essential for strong legal protection and clear expectations:

  • Limitation of Liability: Define the maximum amount your business would owe if a legal dispute arises. This limits your exposure to large claims​​.
  • Disclaimer of Warranties: State that your products or services are provided "as is" and that you are not responsible for unmet customer expectations beyond what is expressly promised​​.
  • Intellectual Property Rights: Specify that all logos, trademarks, website content, or digital products remain your property and cannot be reused without permission​​.
  • User Responsibilities: Outline expectations for how customers or users must behave when using your services (e.g., not violating laws, not misusing products)​​.
  • Termination Clause: Reserve the right to terminate access to services or products if users breach the terms​.
  • Governing Law and Jurisdiction: Identify the state or country laws that will govern the agreement, particularly important for online businesses with a global reach​.
  • Amendments Clause: Include a provision stating how you may amend the terms and how users will be notified​.
  • Privacy Policy Reference: If you collect user data, reference your separate privacy policy and explain the relationship between the two documents​​.

Each of these clauses strengthens the enforceability of your terms and conditions and helps manage risk more effectively.

Making Terms and Conditions User-Friendly

While legal precision is crucial, accessibility matters too. To ensure your terms are enforceable:

  • Use Clear Language: Avoid excessive legal jargon so that users easily understand their rights and obligations​.
  • Organize with Headings: Break sections into clearly labeled headings and bullet points for easier reading​.
  • Accessibility: Make the terms easy to find on your website (e.g., footer link) and prompt users to accept them during transactions​.
  • Provide a Contact Option: Offer users a way to contact you with questions about the terms, showing transparency and good faith​.

Frequently Asked Questions

  1. Why are terms and conditions important for my business?
    Terms and conditions protect your business by setting clear expectations with customers, limiting your liability, and providing legal remedies in case of disputes.
  2. What happens if I don't include terms and conditions?
    Without terms and conditions, you may face greater legal risks, have difficulty enforcing your rights, and leave critical issues like payment terms or dispute resolution open to interpretation.
  3. Can I copy another company's terms and conditions?
    No. Your terms must reflect your specific business model, services, and jurisdiction to be enforceable. Copying could expose you to compliance gaps or legal issues.
  4. Do terms and conditions need to be reviewed by a lawyer?
    While you can draft them yourself, having an attorney review your terms ensures compliance with relevant laws and improves their enforceability. You can find experienced business attorneys on UpCounsel.
  5. How often should I update my terms and conditions?
    You should update your terms regularly, especially after changes in business practices, new product launches, or significant legal developments.

If you need help learning more about how to draft terms and conditions in a contract, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law, and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.