Drafting Effective Terms and Conditions

Note: Want to skip the guide and go straight to the free templates? No problem - scroll to the bottom.
Also note: This is not legal advice.

Introduction

Creating effective terms and conditions is a crucial part of any business. It can provide the framework for resolving disputes, as well as make sure both parties involved in a contract are aware of their rights and obligations. Drafting these documents properly is essential to ensure they meet the needs of both parties and are legally binding.

The Genie AI team, which has developed the world’s largest open source legal template library based on millions of datapoints that teach its AI what market-standard T&Cs look like, understands this better than anyone. To help businesses get this right, Genie AI have put together some advice for crafting strong terms & conditions:

1. Consider the needs of both parties at all times – make sure that your T&Cs are tailored to each one’s specific requirements;
2. Make sure the language used is easy to understand - use clear wording that everyone can comprehend;
3. Ensure your T&Cs cover all elements relating to the agreement – payment terms, dispute resolution and warranties should all be included;
4. Draft with enforceability in mind – research relevant legal requirements before you start working on your document; and finally,
5. Review regularly to keep them up-to-date - That way everyone knows what changes have been made so they can adjust accordingly.
   Not only do effective terms & conditions protect both sides from any potential issues arising but they also provide clarity and certainty in a contractual situation. So don’t leave it until it’s too late - use our step-by-step guidance below or access our template library today to ensure you have everything covered!

Definitions (feel free to skip)

Party: A person or group involved in an agreement.
Scope: The range of activities and services covered by an agreement.
Obligation: A duty or responsibility that must be fulfilled.
Jurisdiction: The authority of a court to hear and decide a case.
Provision: A clause or section of a contract that outlines the rights and responsibilities of each party.
Legalese: Complex legal language that is difficult to understand.
Enforceable: Legally binding and capable of being enforced.

Contents

• Identifying the parties involved in the agreement
• Outlining the scope of the agreement
• Describing the services and/or goods to be provided
• Establishing the timeline for completion
• Explaining the rights and responsibilities of each party
• Explaining the obligations of each party
• Establishing any limitations on the rights of each party
• Determining the applicable laws and jurisdiction
• Researching the applicable laws of the governing state
• Determining which state’s laws will apply
• Establishing the payment, delivery, and warranty provisions
• Specifying the payment terms
• Describing the delivery arrangements
• Outlining the warranty details
• Outlining the dispute resolution process
• Describing the process for dispute resolution
• Establishing the timeline for resolution
• Writing clear and concise language
• Defining any ambiguous terms
• Ensuring that the contract is free of legalese
• Ensuring the contract is enforceable
• Checking for any potential loopholes
• Verifying that all parties have given consent
• Creating an agreement that is easy to understand
• Examining the agreement for any potential misunderstandings
• Ensuring that all parties understand the contract’s terms
• Reviewing and editing the contract
• Examining the contract for any errors or omissions
• Making any necessary revisions to the agreement

Get started

Identifying the parties involved in the agreement

• Determine who the parties are that are entering into the agreement
• Get the contact information of all parties involved, including full names and addresses
• Specify which party will be the drafter and which party will be the recipient of the agreement
• Include any other relevant information about the parties involved, such as their business name (if applicable)
• Make sure all parties have agreed to the terms of the agreement before moving on to the next step

Outlining the scope of the agreement

• Create a list of the key points that need to be addressed in the agreement
• Identify any specific points that the parties want to include to limit the scope of the agreement
• Specify any items that are excluded from the agreement
• Ensure that the scope of the agreement is clear and unambiguous
• Include any definitions of key terms
• Check that all relevant areas are covered in the agreement

When you’ve completed these steps, you’ll have a clear understanding of the scope of the agreement and be ready to move on to the next step.

Describing the services and/or goods to be provided

• Provide a detailed description of the products and/or services to be provided.
• Include any specifications, such as quantity and quality, that must be met.
• Make sure to note any exclusions or special considerations that must be taken into account.
• When finished, review and confirm that the description is accurate and complete.

Establishing the timeline for completion

• Identify the timeline for completion of services and/or goods to be provided.
• Establish a timeline for the entire project and milestones for each step.
• Specify when payments need to be made throughout the project.
• Establish a timeline for when changes and additions to the agreement can be made.
• Set a timeline for any disputes or disagreements to be resolved.
• When all the above conditions have been established and agreed upon, the timeline for completion of the services and/or goods can be established.

How you’ll know when you can check this off your list and move on to the next step:

• When all parties have agreed upon the timeline for completion of the services and/or goods to be provided, the timeline has been established and agreed upon.

Explaining the rights and responsibilities of each party

• Identify who each party is (e.g. the buyer and the seller)
• Outline the rights and responsibilities of each party
• Specify any limitations or restrictions on the parties’ rights or responsibilities
• Clarify any liability or indemnification issues
• When possible, use plain language and avoid legalese
• Once you are satisfied with the description of the rights and responsibilities of each party, you can move on to the next step.

Explaining the obligations of each party

• Identify the obligations of each party and list them out in detail
• Describe the responsibilities of each party as thoroughly as possible
• Consider any supporting resources, such as third-party services, that may be necessary for each party to fulfill their obligations
• Outline any consequences for failing to fulfill the obligations of each party
• Make sure to outline any deadlines or timelines related to the obligations of each party

When you have drafted a clear, comprehensive explanation of the obligations of each party, you will be ready to move onto the next step.

Establishing any limitations on the rights of each party

• Consider any limitations that should be imposed on the rights of each party, such as limitations on liability or warranties
• Create specific language to limit the rights of each party, including any disclaimers or limitations of liability
• Consider any additional limitations to the rights of each party that may be necessary, such as restrictions on the use of the services
• Review the limitations you have established and make any necessary revisions
• Once you have finalized the limitations on the rights of each party, you can check this off your list and move on to the next step.

Determining the applicable laws and jurisdiction

• Identify the governing state or jurisdiction for the contract
• Research the state’s laws that apply to the contract
• Consider any special regulations or codes that may apply to the contract
• Determine the governing law for the contract (the law that will apply to interpret the contract)
• Make sure that you are familiar with any applicable laws and regulations
• Make sure that the contract complies with any applicable laws and regulations
• Once you have identified the applicable laws and jurisdiction, you can move on to the next step.

Researching the applicable laws of the governing state

• Identify the laws that are applicable to the terms and conditions of the contract.
• Research the state laws that are relevant to the contract.
• Research any specific industry regulations that may be applicable to the contract.
• Review any legal precedents related to the contract.
• When finished, you can move on to the next step of determining which state’s laws will apply.

Determining which state’s laws will apply

• Research the state’s laws applicable to your business.
• Consider the governing state’s jurisdiction and the applicable legal provisions.
• Ensure that the state’s laws will not conflict with any other laws applicable to your business.
• Check the governing state’s statutes and other relevant legal documents.
• Once you have determined the governing state’s laws and verified that they do not conflict with any other applicable laws, you can move on to the next step.

Establishing the payment, delivery, and warranty provisions

• Specify the payment terms in the terms and conditions, including the accepted payment methods, payment due dates, late payment fees, and any other relevant details.
• Lay out the delivery terms, such as who is responsible for shipping costs and what the expected delivery timeframe is.
• State any warranties on the product or service being provided.
• Once all these details have been established and documented in the terms and conditions, you can move on to the next step.

Specifying the payment terms

• Set out the payment terms, such as the due date and any discounts for early payment
• Outline the consequences of late payments, such as late fees or interest
• Include a clause that allows the seller to suspend delivery of goods or services if payments are not made on time
• Specify any additional payment requirements, such as deposits or prepayments
• Make sure that the payment terms comply with your local laws and regulations

Once you have set out the payment terms, you can check this off your list and move on to the next step.

Describing the delivery arrangements

• Clarify who is responsible for the delivery of the goods
• Specify whether delivery will be free of charge, or if there will be a fee associated
• State whether you are responsible for all the delivery costs, or if the customer will bear some of the costs
• Include information on which parties are responsible for organizing the delivery and any associated incurred costs
• Specify the estimated delivery time
• Describe the process for tracking orders
• Outline the customer’s obligations for receiving the goods
• Include any other relevant information related to delivery

Once you have clarified and documented the delivery arrangements, you can check this step off your list and move onto the next step: outlining the warranty details.

Outlining the warranty details

• Identify any warranties or guarantees you offer
• Outline details of the warranty, such as duration, coverage, and any exclusions
• Describe the process for filing a claim under the warranty
• Make sure the warranty language is clear and easy to understand
• Check the warranty language to make sure it complies with applicable laws

Once you have outlined the warranty details, you can check this step off your list and move on to the next step of outlining the dispute resolution process.

Outlining the dispute resolution process

• Research the relevant local laws and regulations that apply to your business
• Determine which dispute resolution methods are best suited to your company and its customers
• Include a clause that explains the dispute resolution process
• Specify the jurisdiction which governs the resolution process
• Include a clause that explains the fees associated with dispute resolution
• Outline the process for how a customer can initiate the dispute resolution process
• Once this step is complete, it should be checked off the list and the next step of describing the process for dispute resolution can be tackled.

Describing the process for dispute resolution

• Define a dispute resolution process to be used for any disputes that arise between the parties.
• Research applicable laws as well as industry standards for dispute resolution.
• Decide which type of dispute resolution process to include in the T&Cs. Options include negotiation, mediation, arbitration, and litigation.
• Outline the dispute resolution process in detail in the T&Cs.
• Make sure to include details such as the parties’ obligations and deadlines, any relevant rules and procedures, the venue, and the governing law.
• Once you have finished describing the process for dispute resolution, check it off your list and move on to the next step.

Establishing the timeline for resolution

• Establish a timeline in which the parties must work to resolve any disputes
• Consider setting a timeline of 30-90 days as a reasonable amount of time to resolve disputes
• Make sure to clearly specify in the terms and conditions when this timeline begins, to ensure all parties are aware of when the timeline starts
• You can also include provisions for extending the timeline if needed
• Once you have established the timeline for resolution, you can check this step off your list and move on to writing clear and concise language for your terms and conditions.

Writing clear and concise language

• Write the terms and conditions in language that is easy to understand for the average consumer
• Break down the information into short, simple sentences
• Utilise plain language and avoid legal jargon
• Avoid using negatives (e.g. “not”, “cannot”, “no”, etc.)
• Remove any unnecessary words
• Include a glossary of definitions for any ambiguous or technical terms

You can check this step off your list when you have written the terms and conditions in simple language that is easy to understand.

Defining any ambiguous terms

• Look over the terms and conditions to determine if there are any words or phrases that can have multiple interpretations
• Consider consulting a lawyer if there are words or phrases that need a more specific definition
• Include definitions of any ambiguous terms in the agreement to reduce the risk of misinterpretation
• Once you have defined any ambiguous terms, check off this step and move on to the next step.

Ensuring that the contract is free of legalese

• Read the entire contract and look for any legalese or legal terms
• Replace any legalese with plain language that is easier to understand
• Avoid using words with multiple meanings to ensure clarity
• Make sure that the contract is written in simple language that can be understood by all parties
• Check that the contract is easy to read and doesn’t contain any technical jargon
• Once you have ensured that the contract is free of legalese, you can move on to the next step.

Ensuring the contract is enforceable

• Determine which party is responsible for ensuring compliance with the contract
• Establish the legal governing law and jurisdiction of the contract
• Ensure that all parties are in agreement with the terms and conditions of the contract
• Make sure that all parties understand the consequences of any breach of the contract
• Make sure that the contract is in writing and signed by all parties
• Include provisions for any future changes or modifications to the contract

Once all of the above items are addressed and included in the contract, you can be confident that the contract is enforceable and you can move on to the next step of checking for any potential loopholes.

Checking for any potential loopholes

• Carefully review the entire contract to ensure there are no potential loopholes
• Make sure all statements are clear, precise and do not leave room for interpretation
• Check to make sure all necessary information is included, such as payment terms, delivery terms, and other relevant details
• Have a legal expert review the contract to identify any potential issues
• Once all loopholes have been identified and addressed, you can check this off your list and move on to the next step.

Verifying that all parties have given consent

• Ensure that all parties involved have given their consent and understand the terms and conditions outlined in the agreement.
• Obtain written confirmation of consent from each party and keep a record of it.
• Check that all parties involved have reviewed and accepted the agreement and are legally able to enter into the agreement.
• Make sure that all the parties involved are aware of the rights and responsibilities outlined in the agreement.
• Check that the agreement is signed by all parties involved, with signatures being witnessed and/or notarized if necessary.

Once all the above steps have been completed and all parties have given their consent, you will be able to move on to the next step.

Creating an agreement that is easy to understand

• Read through the agreement, highlighting any words or phrases that could be misinterpreted or unclear
• Ask any relevant parties, such as lawyers or customers, to review the agreement and suggest any necessary changes
• Make any adjustments based on that feedback
• Use language that is concise and straightforward, avoiding any jargon or overly technical language
• Ensure that the agreement is written in a logical flow and is easy to follow
• When the agreement is clear, concise, and logical, you can check it off your list and move on to the next step.

Examining the agreement for any potential misunderstandings

• Proofread the contract to ensure that all of the terms are clear and easy to understand
• Check that all of the parties involved in the agreement are aware of the terms they are agreeing to
• Have all parties sign the agreement to make sure that they understand and agree to the terms
• Make sure that the agreement is legally binding and enforceable
• Have a lawyer review the agreement to make sure that it meets all legal requirements
• Once you have completed these steps, the agreement should be ready to be used
• You can safely move onto the next step, ensuring that all parties understand the contract’s terms.

Ensuring that all parties understand the contract’s terms

• Make sure to explain each term and condition in detail, including any definitions and exceptions.
• Explain to all parties involved how each term and condition will be applied in practice.
• Ask the parties to sign an acknowledgement that they understand the terms of the contract and agree to them.
• Ensure that all parties have a copy of the contract with the agreed-upon terms clearly marked.
• Ask questions to clarify any misunderstandings and, if necessary, make changes to the contract to ensure that all parties understand.

When you can check this off your list and move on to the next step:

• When all parties have signed an acknowledgement that they understand the terms of the contract and agree to them.
• When all parties have a copy of the contract with the agreed-upon terms clearly marked.

Reviewing and editing the contract

• Read through the contract and make sure all the terms and conditions are clearly stated
• Check for any typos, spelling errors, grammar mistakes, and formatting issues
• Ensure that all the legal language and definitions are accurate
• Review the contract to make sure it does not contain any bias language
• Verify that all parties have signed and dated the document
• Make sure that all parties involved have access to a copy of the contract
• Check that the contract is formatted correctly and all signatures are in place
• Once you have finished your review and edits, you can finalize the contract and move on to the next step.

Examining the contract for any errors or omissions

• Carefully read through the contract to ensure that all necessary and relevant clauses are included
• Check for any typos, spelling errors, or punctuation mistakes
• Confirm that all language is clear and precise, and that each clause accurately reflects the parties’ intentions
• Verify that all listed parties have agreed to the contract and have properly signed it
• Ensure that the contract is dated correctly
• You can check this step off your list when you are satisfied that the contract is accurate and complete.

Making any necessary revisions to the agreement

• Carefully review the agreement to make sure all important information is included and accurately represents the parties involved
• Check to see if any provisions are missing or need to be clarified
• Make any changes that are needed to ensure the agreement is comprehensive
• Double-check to make sure the agreement matches the initial expectations of the parties involved
• Once any changes have been made, ask the other party to review the document to ensure they are satisfied with the final version
• After the agreement has been reviewed and any necessary revisions made, you can move on to the next step in the process

FAQ:

Q: What is the difference between UK, USA and EU laws regarding Terms and Conditions?

Asked by Emma on 5th April 2022.
A: The laws surrounding Terms and Conditions vary across the UK, USA and EU, as each jurisdiction has different regulations in place. In the UK, for example, Terms and Conditions must be fair and reasonable for both parties and must be clearly communicated to the consumer. In the US, Terms and Conditions must comply with consumer protection laws, as well as any applicable state laws. In the EU, Terms and Conditions must meet certain criteria, such as being written in plain language and containing specific information about the terms of the transaction. Ultimately, it is important to ensure that your Terms and Conditions comply with all relevant laws in your jurisdiction when drafting them.

Q: How do I create effective Terms and Conditions that work for my business model?

Asked by Patrick on 28th August 2022.
A: When creating effective Terms and Conditions for your business model, it is important to consider factors such as your industry sector, the nature of your services or products, and any legal requirements that may be applicable to your business. You should also think about how you want to protect yourself or your business from potential legal issues in the future. Additionally, it is essential to ensure that the terms you set out are fair and reasonable to both parties involved in the transaction. Finally, once you have drafted your Terms and Conditions it is important to review them regularly to make sure they are up-to-date with any changes in legislation or industry practices.

Q: Do I need Terms & Conditions if I’m just selling products online?

Asked by Abigail on 10th December 2022.
A: It is highly recommended that you have Terms & Conditions for any online transaction you may enter into. This could include selling products online, using a website or app to provide services or even using third-party payment processors to receive payments from customers. Having a well-drafted set of Terms & Conditions can help protect you from potential legal issues in the future and provide a contractual basis for transactions taking place on your website or app. It is important to ensure that you are familiar with any applicable laws or regulations when drafting your Terms & Conditions so that they are compliant with all relevant legislation.

Q: What information should I include in my Terms & Conditions?

Asked by Noah on 8th February 2022.
A: When drafting your Terms & Conditions it is important to include specific information so that both parties understand their rights and obligations under the agreement. This can include information such as delivery timescales, prices and payment terms, contact details for both parties, a description of the goods or services being provided, a statement of consumer rights, liability limits for both parties, cancellation policies and termination rights. Additionally, it is important to make sure that all terms are written in plain language so that they are easy to understand for both parties involved in the transaction.

Q: What other documents should I have alongside my Terms & Conditions?

Asked by Emma on 18th June 2022.
A: Depending on what type of business you are running there may be other documents which should accompany your Terms & Conditions. Some examples of additional documents which may be relevant include a Privacy Policy which sets out how you will use customer data; a Returns Policy which outlines how customers can return goods; an Intellectual Property Policy which states who owns any intellectual property created; a Website Disclaimer which covers liabilities related to content; and an Acceptable Use Policy which outlines acceptable use of any services provided by you or your business. It is important to ensure that all these policies are compliant with relevant laws in your jurisdiction before using them.

Q: Are there any specific rules I should follow when drafting my Terms & Conditions?

Asked by Jacob on 2nd October 2022.
A: There are several rules which should be followed when drafting effective Terms & Conditions for any type of transaction or service provided. Firstly, ensure that all terms are written in plain language so they are easy to understand for both parties involved in the transaction. Secondly, make sure that all terms are fair and reasonable for both parties involved in the transaction - if terms appear too one-sided they may not be enforceable under law if challenged in court at a later date. Thirdly, ensure that all terms comply with applicable laws - this could include consumer protection laws as well as any other regulations or industry standards applicable to your business or industry sector. Finally, review your terms regularly to make sure they stay up-to-date with changes in legislation or industry practices over time.

Example dispute

Suing Companies for Unfair Terms and Conditions

• A plaintiff can raise a lawsuit against a company if they believe their terms and conditions are unfair.
• To do this, they must provide evidence of the company’s terms and conditions, and demonstrate how they are unfair.
• Unfair terms and conditions may include stipulations that limit the consumer’s legal rights, or that put the consumer at an unreasonable disadvantage.
• The plaintiff must show that the terms and conditions are both unfair and unjust.
• If the plaintiff succeeds in their lawsuit, the court may order the company to pay damages, revise the terms and conditions, or both.
• The court may also award punitive damages as a way of punishing the company for its unfair practices.
• Damages can be calculated based on the amount of money that the consumer lost as a result of the company’s unfair terms and conditions.

Templates available (free to use)

B2B Online Terms And Conditions For Sale Of Goods
B2B Terms And Conditions One Off Supply Of Services
B2B Terms And Conditions Supply Of Services
Competition Terms And Conditions Uk Prize Promotions
Conditions Of Supply Terms And Conditions
Doorstep Terms And Conditions For Consumer Goods Services And Digital Content
General Purchase Order Terms And Conditions Buyer Friendly
General Purchase Order Terms And Conditions Buyer Friendly California
General Terms And Conditions For Services Customer Friendly
General Terms And Conditions For Services Service Friendly Provider
General Terms And Conditions For The Purchase Of Goods And Services Buyer Friendly
General Terms And Conditions For The Sale Of Goods And Services Seller Friendly
In Store Terms And Conditions For Consumer Goods Services And Digital Content
Omni Channel Terms And Conditions For Consumer Goods Services And Digital Content
Omni Channel Terms And Conditions For Consumer Services
Omni Channel Terms And Conditions For Consumer Services And Digital Content
Simple Terms And Conditions For Prize Draw Competitions Uk
Standard B2B Terms And Conditions For Supplying Goods And Services Customer Friendly
Standard B2B Terms And Conditions For Supplying Goods And Services Supplier Friendly
Standard B2B Terms And Conditions For Supplying Goods Uk Customer Friendly
Supply Of Services Terms And Conditions In Favour Of Customer
Uk Website Terms And Conditions Terms Of Use
Wi Fi Terms And Conditions From Wisp To Business Customer

‍