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Getting your terms of service right

Customer terms are usually assembled early, by borrowing from a business that looked similar, and then left in place while everything around them changes. By the time they are read properly they tend to describe an arrangement the business has stopped having, and the person reading them is looking for a way out of it.

Standard terms are a different instrument from a negotiated contract. Nobody on the other side has argued over them, the customer is unlikely to have read them, and the same document is applied to every customer at once. That last feature is what makes them efficient and what makes a defect in them expensive: a weakness in a negotiated agreement affects a single relationship, whilst a weakness in published terms is reproduced across the entire customer base and comes to light in the same circumstances for all of them.

There is also a prior question that drafting alone does not answer, which is whether the terms form part of the contract at all. Terms bind a customer because they were brought to that customer's attention before the bargain was made. A link in a website footer, a document referred to in a proposal but never sent, conditions printed on an invoice that follows the order: under the law of England and Wales these do not all achieve the same thing, and the more onerous a term is, the more clearly it must have been drawn to attention. Businesses that spend properly on drafting frequently spend nothing on how the customer came to be bound, and the second question decides whether the first mattered.

The document and the business drift apart

Terms written at launch describe the product at launch: a single plan, a single price, a single way of paying, customers in one country. Then a free tier appears. An annual option. A mobile application. A marketplace where other people sell. A reseller who signs customers on your behalf. An interface other developers build against. A partner delivering part of the service. Each of those changes what is being promised and to whom, and not one of them causes anybody to open the document.

Drift is not merely untidy. The terms are the account of your obligations that a customer, an insurer, a regulator or an acquirer will read, and where the document says something the business does not do, it is the document that has to be explained. The awkward version is a term the business quietly stopped honouring at some point, because the explanation then has to cover the whole period during which it applied.

The drift stays invisible because these documents are only ever read during a dispute, which means a business reads its own terms for the first time in the circumstances least suited to discovering anything wrong with them.

Whether your customer is a consumer is not your decision

The rules differ sharply according to whether the person on the other end is a consumer or another business. Consumer contracts attract a fairness regime and a body of protections that cannot be excluded by agreement. Between businesses, written standard terms attract a control of their own, and the drafting has considerably more room to work in.

Businesses assume they know which of the two they are dealing with, because they know what they intended to sell. Consumer status turns on the capacity in which the individual is acting, rather than on how the product is described on the pricing page. A sole trader buying a tool used partly for private purposes. An individual signing up to the self-serve tier of a product sold to companies. A customer invoiced personally because that was simpler for everyone. The tidy classification in the business plan has no bearing on any of them.

Terms drafted for business customers and applied to a mixed base will contain exclusions and limits that do not hold against part of that base, and they tell those customers they have fewer rights than the law in fact gives them. That second effect does damage on its own. A customer refused something the law entitles them to does not generally accept it quietly. They complain, they reverse the payment through their card provider, and they say so where other customers can read it. A company whose sales team describes it as strictly business to business, and whose self-serve tier is full of individuals, is holding two facts that have never been placed next to each other.

Whatever the terms promise, the business has to deliver

A statement in customer terms about availability, response times, delivery or the level of support is a contractual commitment, whether or not anybody inside the business treats it as one. Language lifted from a sales page into a legal document changes character on the way across, and the team responsible for meeting it is generally unaware that a commitment now exists to be met.

The opposite divergence is more common and more interesting. Practice is often more generous than the document: refunds given well outside the stated position, cancellations accepted that the terms do not permit, credits issued to keep a relationship alive. Customers form their expectations from what the business does rather than from what it has published, and an organisation operating that way is running two sets of terms, of which only one has been written down. The operated version is the one the customer will describe, the written version is the one produced in a dispute, and the distance between them has to be explained by the people who created it.

Change, and proving which version applied

Because the terms govern everybody at once, changing them is an operational problem before it is a drafting problem. A clause permitting the business to vary the terms unilaterally is entirely standard, and it is also among the provisions most likely to be challenged where the customer is a consumer. Whether such a clause achieves anything turns on how it is framed and on what the customer is able to do in response to a change.

The harder issue is evidential, and it is almost never addressed. Which version of the terms governs which customer, and can the business demonstrate it? Terms pages are maintained by whoever maintains the website. Sites are redesigned, content is migrated, and the previous document is overwritten rather than archived. The business keeps its accounting records with great care and loses the contract those records relate to.

A version history is free while the terms are live and cannot be recreated afterwards. It is the sort of housekeeping that looks pedantic until somebody asks what a particular customer actually agreed to on a particular day.

The clauses that decide how it ends

Termination, suspension, and what happens afterwards, are the shortest sections of a typical set of customer terms and the ones carrying the largest consequences.

Suspension for non-payment is the clearest case. Whether the business may suspend, on what notice, and what becomes of the customer's data and content while suspended, are questions tested repeatedly in any subscription business. Terms permitting an abrupt cut-off hand the business a powerful commercial lever, and, used against the wrong customer at the wrong moment, a dispute considerably more expensive than the debt that prompted it.

What the customer keeps at the end matters equally. Content they uploaded, records they created, the ability to extract their own data in a form they can use elsewhere: where the terms say nothing, the argument happens at the point of maximum ill will and tends to be won by whichever side can afford to wait. For a business selling to larger organisations, silence about exit is also one of the things that stalls a procurement review.

Terms drafted in the United Kingdom commonly specify the law and the courts of England and Wales, which is sensible and worth doing. It is not safe to assume the clause travels with the document in every case. Where customers are consumers outside the United Kingdom, systems differ, and protections available to a consumer at home are not always displaced by a choice made in a document they never negotiated.

What is not worth doing

For a business at the beginning, selling something inexpensive to a small number of customers, holding little beyond an email address and creating nothing anybody will later want to own, a competent generic set of terms is proportionate. Publish something plain and honest, keep a copy of it, and put the money into the product. Commissioning bespoke terms at that stage buys a document that will be out of date by the time it is needed, because the business will have changed shape before the first dispute arrives.

Timing matters more than the amount spent. The same budget does considerably more work once the model has settled, because the terms can then be written about the business that exists rather than the one that was projected.

One situation is missed regularly. Where you sell through a marketplace, an app store, or any platform contracting with the end customer itself, the operative agreement with that customer may be the platform's rather than yours, and your own terms may govern very little of the relationship. Establishing which document actually governs is worth doing before commissioning anything, and businesses routinely pay for terms that sit underneath a platform agreement they have no ability to vary.

The point at which a properly drafted document earns its cost is recognisable enough. When the value tied up in a single customer relationship is material. When the terms are being read by a customer's procurement or legal function. When personal or payment data is handled at any scale. When the customer base includes consumers and businesses together. When an investor or a buyer is about to read everything the company has signed. Before any of that, the document only needs to be accurate about what the business actually does.

This guide is general information about how these matters usually run. It is not advice, and nothing becomes advice until terms are agreed in writing. Brandleys Legal Ltd delivers reserved legal activities alongside regulated partners.