Terms and conditions - Services for companies

What is a Terms of Service?

Terms and conditions of service  (also commonly known as terms of service) set out the terms on which a company provides services to its business customers. Terms of service are also known as terms of use, terms and conditions, and terms and conditions for the supply of services.

Terms of service are typically included on the company’s website or appended to order forms. They will be drafted in a general way so that they can apply to all contracts that the company concludes with customers. The terms therefore do not include details such as pricing or the specific products ordered (these details will be agreed individually with each customer and will generally be recorded using an order form or via an email confirmation). Additionally, there is no requirement that the customer sign the terms of service, although they should indicate that they have agreed to the terms as part of the order process. 

When should you use a Terms of Service?

Terms of service should be used when providing services to businesses (i.e. not consumers). The terms will apply to all services provided by your company to its customers. It is possible to agree amendments to the terms on a case by case basis but if you generally have to negotiate the legal terms on which you supply services with your customers, you should consider using a services agreement instead. 

Why is a Terms of Service important and why should you use a Terms of Service?

By adopting a general set of terms of service the company avoids having to agree contractual terms with each customer individually. This not only saves time and money on legal fees but also creates a smoother sale process. 

The terms of service will cover a number of key legal areas including: 

• the maximum liability of the service provider;

• how to terminate or cancel the services and what happens when the services are cancelled; 

• ownership of intellectual property created as a result of, or used in connection with, the supply of services; and

• the customers’ obligation if they purchase the services

Additionally, the terms can be used to provide customers with important information such as:

• how to contact your company;

• how to submit a complaint; and

• how the customer must pay for the services.

What are the common pitfalls  of a Terms of Service?

There are a number of consumer protection regulations that must be complied with when providing services to consumers. These do not apply when providing services to businesses. If you are providing your services to consumers, you should consider creating Terms and Conditions - Services for Consumers on PocketLaw’s platform.

In some instances terms can be used in conjunction with the other policies and terms. It is therefore very important that the terms do not contradict the other terms and policies as that would cause confusion as well as potential legal issues. 

A very common pitfall is that the terms don’t reflect the actual business of the company, i.e. that the terms are not suitable for the risks, processes etc. that the business typically has. When creating your terms you should go through the terms thoroughly and consider if each term matches the actual situation that your company míght face. PocketLaw ensures that the terms and conditions created on our platform will be tailored to the specific needs of your company.

Another common mistake is a lack of flexibility to change the scope or pricing of services. The terms should include a clear process for agreeing changes to the services that will be provided. This process should give the supplier ultimate discretion to accept the change and the ability to quote a new price for the services as a result of the change. Supplier friendly terms should also allow the supplier to pass on any increase in costs associated with the supply of services. The failure to provide for this could result in the supplier being required to continue to provide services at a loss.

Even with the flexibility to agree changes, it is sometimes simply necessary to terminate the relationship between the parties. Supplier friendly terms should give the supplier the ability to terminate in the event of a material breach or failure to pay fees. It is also essential that the terms require the customer to pay all outstanding fees for work done at the point the termination occurs.  

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