It is likely that you will encounter a number of legal documents in your life. In fact, it comprises aspects of everyday life all the time. Every time you engage in a service, especially online, you will most certainly be required to read and agree to a Terms of Service and Terms and Conditions.
At its core, there is no real legal difference between the two. In effect, they are rules by which one must agree to abide in order to use a service. These terms can also be merely a disclaimer, especially regarding the use of websites. If there is any difference, it is that Terms of Service or Terms of Use may apply specifically to the use of a service or goods. Whereas a Terms and Conditions may just be a general disclaimer excluding liability. There is much overlap between the two. A Terms of Conditions can incorporate Terms of Use or Terms of Service holistically.
Contract law
Whilst Terms of Service and Terms and Conditions are for the most part contracts, they vary slightly to ordinary contracts. For a contract to form, there must be an exchange of some economic value, sufficient but not necessarily adequate or commensurate. There may be occasions where agreeing to a terms of service or terms and conditions will form the basis of a monetary exchange for the use of a product. However, it is not always the case. This is why terms of service and terms and conditions sit a little bit separately to ordinary contractual relations. They are nonetheless legally binding and must be adhered to if agreed to.
Suitability
The difference in terms and title of the legal documents can be a matter of preference and suitability for the product or business. Whilst there is no hard and fast rule, below are some examples of where each of the different title of legal documents may be suited:
- Terms of Service and Terms of Use are common for consumer software products
- A Terms of Service agreement is likely more common for business to business (B2B) software. It is more common the see this exchange between businesses than that of business and consumer
- Terms and Conditions are common in instances where no use of software is involved, likely in traditional contracts
Things to include
If you run a business, especially an online business, you are legally required to have a terms of service or terms and conditions on your website. The following elements are often included:
- Proper or expected usage; definition of misuse
- Accountability for online actions, behaviour, and conduct
- Privacy policy outlining the use of personal data
- Payment details such as membership or subscription fees
- Opt-out policy describing procedure for account termination
- Arbitration detailing the dispute resolution process and limited rights to take a claim to court
- Disclaimer of Limitation of Liability clarifying the site’s legal liability for damages incurred by users
- User notification upon modification of terms if and when adjusted
The Australian Government Business website contains helpful guidelines on best practice for online businesses. Consulting an IT lawyer is also highly recommended.
Things to be mindful of
Some Terms of Service are worded to allow unilateral amendment. This is where one party can change the agreement at any time without the other party’s consent. Many of these legal documents are hard to understand. They can often be incomprehensible, even to people with an understanding of the law. Never agree to or sign anything that you do not fully understand. However, we all know that the practical realities of life limit how much we can really abide by this creed. Many of these documents are extremely long, making it unrealistic for any busy person to read through with any ease. Reading the shorthand product or website FAQs and speaking with the proprietors of the business you are engaging with can help clarify any issues or questions you might have.
Whilst there is no material difference between the two concepts, each of the terms will vary. Each situation is unique. Therefore, it is very important that you read what you are signing and essentially agreeing to. Never assume you know what the terms are. Contract law holds the view that whilst you must know what a contract is for, you do not have to have read or understood its full contents in order for it to be legally binding. Accordingly, if you are unsure about any Terms of Service or Terms and Conditions, it is worthwhile seeking the advice of a contract lawyer.
