If people sign without reading, do T&Cs matter?
5 min read
24 October 2016
Contractual relationships are everywhere, in business and our personal lives, and so the question arises, do people always read what they sign? The honest answer for many will be no – so do T&Cs matter?
Much is now made of tech companies laying it on thick with terms and conditions (T&Cs). There are websites devoted to checking the length of end user agreements, comparing them to literary works (the Paypal User Agreement has 28,126 words – making it longer than Macbeth) and articles have been penned on how long it would take an individual to read and digest the agreements connected to every tech product or service they use as they go about their day online. But do T&Cs matter?
It’s easy to point to extreme examples, but it comes as no surprise that surveys have found most people simply tick “read and understood” without further thought, keen to have access to the product or service itself. Certainly, the various stories of “Herod clauses” being inserted into agreements, by which consumers unwittingly agree to give up their first born child, would seem to back this up.
Once again, if people aren’t reading them, do T&Cs matter? Are they even effective? The short answer is that T&Cs remain essential in providing protection to businesses and if drafted well, may well help you avoid future disputes.
The reality is that there is a contractual relationship between supplier and consumer. T&Cs provide the parameters of that relationship and set out the rights and obligations of the parties. While it’s important that the terms protect your company, and the product you have invested time and money in developing, there’s no advantage in making the terms as long as possible or bombarding people with legalese. The best way to avoid any potential disputes is for the terms to be as clear and unambiguous as possible.
Individual consumers, unlike business customers who can engage in commercial negotiations on an even footing, are protected by rules set out in the Consumer Rights Act 2015 (CRA). The CRA implies certain terms into the contract, for example relating to quality and fitness for purpose, consolidating and enhancing the protection of consumers, and also provides for remedies for wronged consumers.
As for enforceability, according to the CRA a term will be unfair, and therefore not binding on the consumer, if it causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer. Importantly, the CRA also specifically states that terms must be drafted in “plain and intelligible language”. In this vein, in relation to online terms and conditions specifically, the Court’s approach has been that consumers should be able to read and digest any terms and conditions before ticking any box allowing them to proceed.
It’s likely that there will be further developments in this area, particularly in relation to the ever larger tech industry. Both the Competition and Market’s Authority and the Financial Services Authority have given guidance suggesting a belief that long agreements with “read and understood” declarations may be unfair, in particular where any important terms that could otherwise come as a surprise to the consumer are not flagged up.
What is clear is that caution is required. Do T&Cs matter? The answer is yes as they protect a firm’s position and helps it avoid costly legal wrangling. So make sure you get them right. Make sure the agreement uses plain and intelligible language to set out the rights and obligations of you and the consumer clearly, succinctly and without room for uncertainty; make sure the agreement is tailored specifically to your business and the product or service you are providing (there’s no one size fits all); and make sure the terms comply with current legislation.
Robyn Watson is an associate in the commercial litigation team at law firm Howard Kennedy.