Online shop terms and conditions, the clauses your store actually needs

The checkout page of your new online store is nearly finished. The product pages are live, the payment gateway is connected, and then someone asks the question that stalls the launch: where are the terms and conditions customers agree to? If you are working from a template you found online, or from terms your web developer copied off another site, this is the moment to stop and think about what the document actually needs to do.

Your online shop terms and conditions are the contract of sale between you and each customer. They set the rules for ordering, payment, delivery, returns and refunds, and they are the first document a court or regulator reaches for when something goes wrong. They are not the same as your website terms, which cover browsing and user-generated content, or your privacy policy, which covers personal information. And they operate inside a legal framework you cannot draft your way out of: the consumer guarantees in the Australian Consumer Law (ACL), which is Schedule 2 of the Competition and Consumer Act 2010 (Cth), apply to almost every sale you make and survive anything your terms say to the contrary.

The essential clauses for an online shop

How the terms become binding

For your terms to work, the customer has to actually be bound by them. That turns on incorporation: the terms must be brought to the customer's attention before they complete the purchase. The standard approach is clickwrap at checkout, an unticked box saying "I agree to the terms and conditions" with a link to the full text, which the customer must tick before the order can be placed. A passive link in the footer, or terms that only appear in the confirmation email, may never form part of the contract at all. In eBay International AG v Creative Festival Entertainment Pty Ltd [2006] FCA 1768, the Federal Court found that a ticket condition was not incorporated because it was not drawn to the attention of purchasers in some sales channels, and held that the organiser's public claims about enforcing the condition were themselves misleading. Two drafting points follow:

• Bring terms forward: put the link and a short summary where the customer's eye is, not only in the footer.
• Record acceptance: keep the version the customer agreed to, with a timestamp, in case you need to prove it later.

Products, pricing and availability

Describe what you sell accurately, and do not use the description to disclaim the consumer guarantees. A clause saying "handmade items may vary slightly from the images" is fine; a clause saying "no guarantee as to quality" is void. On price, be careful with the single price rule in s 48 of the ACL: if you show one component of the price, such as a delivery fee, you must also show the total single price prominently, with delivery identified separately. State whether prices include GST and how discounts are applied. And decide how you will handle a manifest pricing error: most terms let the store cancel or correct an order placed at a plainly wrong price, which is useful, but the error must be genuine and the customer must be told promptly. Keep two drafting points in mind:

• Single price: show the all-in figure, not just a component.
• Pricing errors: reserve the right to cancel, but only for genuine mistakes.

Orders, acceptance and payment

Make the contract formation point explicit. The usual drafting is that the customer's order is an offer to buy, and the contract is formed when you accept it, which you can define as the point of dispatch or the dispatch confirmation. That decides when the customer can cancel and when you are bound to sell at the listed price. State which payment methods you accept, when payment is taken, and whether any method carries a surcharge. Surcharges are regulated: under s 55B of the Competition and Consumer Act 2010 (Cth), a payment surcharge must not be excessive, which in practice means it cannot exceed your cost of accepting that payment method. A flat "3% card surcharge" applied without regard to your actual costs can breach the prohibition. You should also reserve the right to cancel suspected fraudulent orders and say how refunds are handled in that situation.

Delivery, risk and title

Set realistic delivery windows: handling time, dispatch cut-off and expected transit time, so the promises on your checkout match what the warehouse can actually do. State when risk passes. In most online shop terms, risk transfers to the customer when the goods are delivered, or when they are handed to the carrier, and the clause should match who bears the claim if a parcel goes missing in transit. Title is separate from risk: you can keep ownership of the goods until the customer has paid in full, which is standard and useful if a payment is later disputed. The drafting minimum is that your shipping page, your order confirmation emails and your terms tell the same story, because customers will compare them.

Returns, refunds and the consumer guarantees

This is the clause that most often causes trouble, because it sits on top of law you cannot override. The ACL gives consumers guarantees that goods are of acceptable quality (s 54), fit for the purpose the customer made known to you, and match their description (s 56). If goods fail a guarantee, the consumer is entitled to a remedy, and s 64 of the ACL voids any term that purports to exclude, restrict or modify those guarantees. For a major failure (s 260), which includes goods a reasonable consumer would not have bought had they known the full picture, the customer can choose a refund or replacement. For a minor failure, you can choose to repair the goods, replace them or refund the price (s 261). Your terms should describe that accurately, not contradict it, and they should also cover:

• Change of mind: you are not required to offer refunds for change of mind, but if you do, spell out the window, the condition of the goods and who pays return postage.
• No refunds signs: a blanket "no refunds" statement is not just unenforceable, it can itself be misleading conduct under s 18 of the ACL, because it misrepresents the consumer's rights.
• Warranties: if you offer a voluntary warranty against defects, it must meet the requirements in s 102 of the ACL, including a statement that the consumer's rights under the ACL are not affected.

Digital products and subscriptions

If you sell downloads, software or subscriptions, add terms the physical goods clauses do not cover. Set out the licence: what the customer may do with the product, such as personal non-commercial use, and what they may not do, such as reselling, sharing access or copying for distribution. For subscriptions, state the billing cycle, the renewal date, how to cancel and how to turn off auto-renewal. Auto-renewal is a current enforcement focus: buried or confusing renewal clauses can be unfair contract terms under s 23 of the ACL, which voids unfair terms in standard form consumer and small business contracts, and penalties now attach to proposing or relying on such a term. The ACL's protections extend to digital content, so the returns clause needs a workable rule for a product that cannot be "returned": for example, a refund window for defective downloads, and a clearly stated no-refund point once access has been granted.

Promotions, gift cards and loyalty

If you run promo codes, say what they apply to, when they expire and whether they can be combined or used once per customer. Gift cards have their own rules in the ACL: a gift card must remain redeemable for at least three years from supply, any term that shortens that period is void, and the expiry date, or the words "no expiry date", must appear prominently on the card (ss 99C and 99F of the ACL). Post-supply fees on gift cards are also void, so the "monthly account keeping fee" found on some cards is off the table. If you run a loyalty program, set out how points are earned, what they are worth, when they expire and what happens to them if an account is closed.

Accounts, conduct and intellectual property

If customers can create accounts, put the account rules in the terms: the customer is responsible for their password and for activity on the account, and you can suspend accounts for misuse. Add an acceptable use clause covering unlawful activity, scraping, automated purchasing and abusive behaviour. Reserve your intellectual property: the site content, product photography, branding and trade marks belong to you, and the customer gets no licence to reuse them. The mirror-image point matters too: do not copy descriptions, images or terms from another business, because that is likely to infringe their rights, and descriptions borrowed from another supplier will still bind you if a customer relies on them. If you collect names, addresses and payment details, note that the Privacy Act 1988 (Cth) applies to most businesses once annual turnover exceeds $3 million, and your privacy policy must sit alongside the terms.

Liability, disclaimers and force majeure

Limitation of liability clauses are where templates go wrong. You can cap liability for indirect or consequential loss, such as lost profits, where that is lawful, but you cannot exclude the consumer guarantees or liability for failing to comply with them, and s 64 of the ACL makes any such attempt void. Keep the drafting proportionate: a blanket "our liability is limited to the purchase price" will not survive contact with the ACL. Watch for unfair terms too: a clause letting you change prices, products or terms unilaterally without notice or a valid reason can be struck out as unfair under s 23 of the ACL. A force majeure clause covering events outside your control, such as courier disruptions, extreme weather or supplier failure, is worth having, but keep the list factual and update it as circumstances change.

Complaints, disputes and governing law

End the terms with the practical stuff: how a customer raises a problem, the email address to use, and a realistic timeframe for a response. State the governing law, usually the state or territory where your business is based, and say that the courts of that state have jurisdiction. A simple escalation path in the terms, contact us first, then mediation or a small claims forum if needed, resolves most disputes before they reach a lawyer, and it shows a regulator that you are trying to do the right thing.

Optional clauses worth adding

Add a clause only if it reflects something your store actually does:

• Pre-orders and backorders: include if you sell limited drops or products that regularly sell out, so you can define delivery windows and what happens if a drop is delayed.
• Customised or personalised goods: include if you monogram, engrave or build to order, because custom goods are a legitimate carve-out from change-of-mind refunds.
• Competition and prize draw terms: include if you run giveaways, because state and territory permit rules apply to many consumer competitions.
• International sales: include if you ship overseas, to set which country's law applies and who pays duties and taxes.
• Marketplace cross-listing: include if you also sell through platforms such as Amazon or Etsy, to reconcile the platform's rules with your own terms.

When to have a lawyer review your terms

A template will get you most of the way, but the clauses that protect you are the ones that fit your particular operation, and that is where a review earns its keep. An Artificer Legal practitioner would work through your terms against the provisions that actually bite: whether any clause purports to exclude a consumer guarantee, whether the unfair contract terms regime exposes you through unilateral variation, excessive cancellation rights or buried auto-renewal, whether your pricing and surcharge clauses comply with s 48 of the ACL and s 55B of the Competition and Consumer Act 2010 (Cth), and whether your gift card, warranty and privacy statements match what your store does day to day. We would also check the incorporation mechanics, because a beautifully drafted clause the customer never agreed to is worth nothing, and we would reconcile the terms with your shipping, returns and privacy policies so the documents tell one story. If you are launching, revising terms after a complaint, or adding subscriptions or a marketplace channel, a review of the draft before it goes live is cheaper than the dispute it prevents.

The returns and consumer guarantees clause

If one clause decides whether your terms protect you in practice, it is the returns and consumer guarantees clause. It is the most visited page on most online stores, the first thing a customer quotes in a chargeback or tribunal claim, and the clause regulators read first when they look at an ecommerce business. Draft it as a statement of your obligations, not a shield against them: describe the guarantees accurately, set out your process for major and minor failures, and let your change-of-mind policy sit separately and clearly. A returns clause that fights the ACL does not reduce your liability, it adds a second problem, because the attempt itself can be misleading conduct. Get this clause right, and the rest of the terms are mostly housekeeping.

To recap: your online shop terms are the contract of sale, and they only bind a customer if they are brought to the customer's attention before purchase. They should walk through products and pricing, orders and payment, delivery and risk, returns and guarantees, digital products, promotions, accounts, liability and disputes. Every clause must respect the consumer guarantees and the unfair contract terms regime, which you cannot contract out of. And once the draft is done, have a lawyer check it against your actual operations before it goes live.