All about Terms & Conditions (with Template and Tips)

What are Terms and Conditions (T&C)?

Terms and conditions are usually written by the product or service providers and include all matters that customers need to be aware of. They often cover areas such as the use of products and services, personal privacy, legal liability, etc., depending on the circumstances. For example, a common disclaimer will state that the merchant will not be liable for any damages that may arise from the use of the product or service by the customer.

T&C Template

These general terms and conditions below (the “Terms”) shall apply to sales of Goods by the Seller to the Buyer.

1. DEFINITIONS
   
   1. “Goods” mean the goods and/or services agreed to be supplied by the Seller and purchased by the Buyer pursuant to the Contract.
   2. “Buyer” means the person or company whose name appears on the Order.
   3. “Contract” means the contract for the sale and purchase of the Goods as provided in clause.
   4. “Order” means the Buyer's purchase order.  
   5. “Proprietary Information” means any and all information and intellectual property relating to the Goods Including but not limited to patents, designs, drawings, instruction booklets, specifications, circuit drawings, componentry, trade secrets, trademarks and copyright in such information and intellectual property.  
2. CONTRACT
   
   1. Contract shall be formed by and upon the Buyer and Seller reach a consensus on the price of the Goods. Each Contract shall be governed by these Terms.
3. PRICES
   
   1. The prices quoted by the Seller, unless otherwise expressly stated, do not include any packaging, freight, assembly costs, installation costs, costs and charges of third-party suppliers, insurance or any statutory, sales, value-added tax or VAT, goods and services, or other taxes, duties or imposts, all of which may be added to the prices.
   2. All prices in the Seller's price list from time to time are subject to change without notice.
4. PAYMENT
   
   1. The Buyer shall pay the prices due and payable in accordance with the terms of payment as specified in the invoice supplied by the Seller.
   2. If payment of the price or any part thereof is not made by the due date, the Seller shall be entitled to:
      
      1. require payment in advance of delivery in relation to any Goods not previously delivered; and/or
      2. refuse to make delivery of any undelivered Goods without incurring any liability whatsoever to the Buyer for non-delivery or any delay in delivery.
5. RETURNS AND REFUNDS
   
   1. Defective Goods may be returned within 7 days from the date of delivery for a refund or exchange.
   2. Returns of non-defective Goods are at the discretion of the Seller and can be subject to a restocking fee.
   3. Returns of Goods that are furnished in the form of services are at the discretion of the Seller.
6. INTELLECTUAL PROPERTY
   
   1. The Buyer acknowledges that all Proprietary Information and all right title and interest therein are the sole property of or licensed by the Seller and the Buyer shall gain no rights, title or interest in the Proprietary Information whatsoever.
7. LIMITATION OF LIABILITY
   
   1. To the maximum extent permitted by law and notwithstanding any provision to the contrary in these Terms, the Seller's total liability under each Contract (whether that liability arises under contract, tort, equity, statute or otherwise) for any loss, damage or expense arising out of or in connection with its performance of the Contract, shall be limited to the purchase price paid by the Buyer to the Seller for Goods covered by that Contract and in no event shall the Seller be liable for loss (whether direct or indirect) of profits, opportunity, revenue, goodwill, use, production, contracts, business or anticipated savings, corruption or destruction of data or for any special or consequential loss or damage whatsoever.
8. DEFAULT
   
   1. If the Buyer defaults in any payment due to the Seller or breaches any term and condition of the Contract, or if bankruptcy or insolvency proceedings are instituted by or against the Buyer or the Buyer makes or proposes to make any arrangement with its creditors, then the Seller may, at its option, do any or all of the following without prejudice to any other rights the Seller has under the Contract and without notice to the Buyer including but not limited to:
      
      1. Cease manufacturing and/or withhold any deliveries of the Goods;
      2. Vary the payment terms so that all monies outstanding under the Contract become immediately due and payable on demand; and/or
      3. Terminate performance of the Contract and/or other contracts between the Seller and the Buyer.
   2. Termination of the Contract shall be without prejudice to any right that may have accrued to the Seller or the Buyer under the Contract.
9. FORCE MAJEURE
   
   1. The Seller's obligation under these Terms shall be suspended where the Seller becomes unable to carry out that obligation in whole or in part, because of any one or more of, but not limited to, accidents, breakage or failure of machinery or apparatus, shortage of manufacturing capacity, withdrawal of business license by the Government, war, riots. Terrorism, sabotage and other labour stoppages, epidemic, national disasters such as flood and typhoon, fire affecting the Seller's operations or the operations of the Seller's suppliers, inability to obtain fuel, power, raw materials, container or transportation facilities, acts of God and acts of Government. In any such event, the Seller shall be entitled to a reasonable extension of its obligations. If the delay persists for such time as the Seller considers unreasonable, it may, without liability on its part, terminate the contract
10. GOVERNING LAW AND JURISDICTION
    
    1. The Contract is governed by and must be interpreted in all respects in accordance with the laws of Hong Kong SAR. The Contract is not governed by the United Nations Convention on documents for the International Sale of Goods.
    2. Any claim or dispute arising out of the Contract shall be submitted to the exclusive jurisdiction of the Courts of Hong Kong SAR.
11. GENERAL
    
    1. If any clause or part of a clause is illegal, unenforceable or invalid by a court, that clause or part is to be treated as removed from these Terms, but the rest of these Terms are not affected.
    2. The waiver by the Seller of any provision or breach by the Buyer of any provision of the Contract shall not be construed as a waiver of any other provisions or breach of any other provision, subsequent breach of the same or any other provision of the Contract.
    3. If these Terms are translated into another language and there is any inconsistency between this English version and the translated version, then this English version text shall prevail.
    4. The Contract cannot be assigned by the Buyer without the prior written consent of the Seller, which is at the Seller’s absolute discretion.

Why do We Need T&C?

For merchants, the most important thing is to satisfy all the needs of customers to build a good customer relationship in the long term and maintain business profitability. While it is the responsibility of the merchants to ensure that the products or services provided are of good quality, it is inevitable that some external factors or misunderstandings may lead to customer dissatisfaction or even losses of varying degrees. Under such circumstances, T&C can serve as a basis for mediation between the two parties to clarify any misunderstanding that the customer may have, and to provide reasonable protection for the trader by controlling the scope of liability that the merchants may be subject to.

For example, some outdoor equipment rental merchants will state in their T&C that they will not refund the deposit if the customer is unable to use the equipment due to inclement weather; or that they will not be liable for any loss incurred by the customer if he/she uses the equipment inappropriately. In addition to products or services, many merchants also include terms of use on their websites to ensure that they will not be held liable for any incorrect or outdated information on their websites.

Content and Tips on Writing T&C

T&C comes in different forms and varies with the industry, nature and location of the business. In general, the content covers:

• Definition of terms used
• User requirements, such as age or location restrictions
• Copyright information (if any)
• Personal information collection statement
• Conditions of sale, such as return, shipment, cancellation and payment methods
• User restrictions
• The right to alter the terms
• Contact information of the business

T&C can be treated as supplementary information and can exempt the merchant from certain legal liabilities. But does it mean that they are a "get-out-of-jail-free card" for the merchant? In fact, whether the terms are valid or not depends on a number of factors; apart from the content, they are also subject to the Control of Exemption Clauses Ordinance (Cap. 71) and the Unconscionable Contracts Ordinance (Cap. 458).

Section 7(1) of the Control of Exemption Clauses Ordinance states that "a person cannot by reference to any contract term or to a notice given to persons generally or to particular persons exclude or restrict his liability for death or personal injury resulting from negligence", which makes it clear that a disclaimers do not exclude liability for death or personal injury to a customer due to the negligence of a merchant. Section 7(2) states that the clause is not binded in such a way if it is reasonable.

Then what does "reasonable" mean? Section 6(1) of the Unconscionable Contracts Ordinance (Cap. 458) sets out the factors that the court will take into account, such as the bargaining power of the parties, the consumer's understanding and the merchant's marketing practices. If the Court determines that the terms or the circumstances of establishing the contract are unconscionable, section 5 of the Ordinance provides that the Court has the power to refuse to enforce part or all of the terms and to alter the unconscionable parts.

After drafting the T&C, we suggest merchants have it checked by people with legal background to prevent major mistakes that will influence its validity.