Strategically handling your company’s terms and conditions (a.k.a. T&Cs) puts you in a better position when you run into a contentious customer or vendor. Read on for the rationale behind a few nuts‑and‑bolts aspects of T&Cs, which you may leverage to enhance the enforceability of your terms.
But first, a warning.
For any dear reader who may be thinking that standard terms are a waste of time, it is worth noting that as a general rule courts tend to not cut businesses much slack when it comes to the terms they agreed to. A frequent quote from the Wisconsin Supreme Court over the years provides a good reminder:
“[People], in their dealings with each other, cannot close their eyes to the means of knowledge equally accessible to themselves and those with whom they deal, and then ask courts to relieve them from the consequences of their lack of vigilance.”1
Be vigilant in structuring your terms and conditions and knowing what terms you are accepting. Once a dispute arises, it is generally not a safe bet to rely on the form of the other party’s terms to save you from unfavorable consequences.
While formatting issues may not save you, established legal principles influence the form of the standard terms. Understanding the rationale behind why standard terms traditionally present the way they do helps in structuring enforceable terms.
Big picture, a contract requires three elements: (1) an offer, (2) acceptance and (3) consideration. The enforceability of standard terms usually comes down to whether the other party accepted them. For certain key terms, for a party to accept the terms, those terms must be “conspicuous.” A conspicuous term is “written, displayed, or presented that a reasonable person against which it is to operate ought to have noticed it.”2
We will briefly explore how the format of standard terms can influence acceptance through three questions that one may ask themselves about the common form of standard terms:
Question 1: Is it a problem if someone needs a magnifying glass to read your terms?
Back in the day, terms commonly appeared on the back page of a purchase order. Companies typically used a very small font to fit all of the terms. Now, with the increased utilization of ERP systems, the space limitations are not as prominent. Nonetheless, it is still common to have a small font for the listing of terms.
From an enforceability standpoint, there is not a hard and fast rule on font size. Rather, the question will be whether a reasonable person could read the terms and accept them.
Question 2: Why are those terms in ALL CAPS? Did someone inadvertently hit the CapsLock key?
The use of all caps for certain terms typically goes to the requirement that those terms be conspicuous. The use of all caps is a common means to attempt to satisfy conspicuousness requirements. It is not the only method though. For example, the definition of conspicuous in the Uniform Commercial Code provides the following:
Conspicuous terms include any of the following:
- A heading in capitals equal to or greater in size than the surrounding text, or in contrasting type, font, or color to the surrounding text of the same or lesser size.
- Language in the body of a record or display in larger type than the surrounding text, or in contrasting type, font, or color to the surrounding text of the same size, or set off from surrounding text of the same size by symbols or other marks that call attention to the language.3
Conspicuousness turns on how the terms stand out as significant, with all caps being one method to satisfy that special requirement.
Question 3: Do those terms buried on a website really apply?
Sometimes you find terms on the back of a purchase order or an acknowledgment—or the second page of an electronic file. It is not uncommon for the terms to also include a reference to additional terms found on a website.
In general, terms found online will be as enforceable as a signed contract. Enforceability analysis will typically turn on how readily available the terms were to the user when they agreed to them. On a sliding scale, the easier it is for the user to see the applicable terms, the more enforceable they are going to be.
If you are interested in considering further key factors in terms and conditions, see our downloadable form here. The form includes annotations and highlights areas of particular interest related to terms of sale.
- Deminsky v. Arlington Plastic Machinery, 2003 WI 15, ¶30, 259 Wis. 2d 587, 657 N.W.2d 411 citing Nauga, Inc. v. Westel Milwaukee Co., Inc., 216 Wis. 2d 306, 314-315, 576 N.W.2d 573 (Ct. App. 1998) quoting Carney-Rutter Agency v. Central Office Bldgs., 263 Wis. 244, 252-253, 57 NW.2d 348 (1953).
- Stat. § 401.201(2)(f)(2019-20)