It’s no secret that the digital product world is absolutely booming and everywhere you look there’s someone else selling something new online.
And as someone that sells digital products myself, I get the hype.
Whether you’re a stay at home mom that wants to make some extra income for your family or someone that’s trying to ditch your corporate career, digital products can be a GREAT way to make all of those things happen and live your best life.
But where digital product sales start to go wrong is when you don’t have your online shop legally backed.
That’s when some real scaries can start to happen, which is why I always preach about having certain contracts and legal agreements in place for your business so you can avoid all of that nonsense!
But beyond knowing what legal agreements to have in place, you might be left wondering, “okay… but how exactly do these protect me?”
And that’s a great question! I also like to know how something works and the full reason behind it before implementing something in my business.
If you’re the type that just wants the simple and straightforward steps to protect your online shop, click here for the 3 Legal Agreements Your Online Shop Needs!
But if you’re the type that wants to understand the clauses that are involved, I’ve got you. 👇🏼
5 Hardest Working Clauses in Your Terms of Purchase
One of the most important legal agreements for your online shop is a Terms of Purchase that sets the rules for how your product can be used.
Not only does a Terms of Purchase cover how someone can use the product they purchase, but it also covers policies that are a part of the purchase process, such as refunds, chargebacks or cancellations.
This type of agreement is often referred to as “Terms and Conditions” and you’ve likely seen these in action during your own purchases with various businesses.
Most businesses have the “I agree to these Terms and Conditions…” checkbox at checkout, which means that you’re actively agreeing to the terms the business has set up.
That little checkbox that you might be familiar with is called a “clickwrap” in the legal world and is the exact way that I advise business owners to display their terms.
When you set your terms as a clickwrap (NOT a browsewrap), your agreements are more enforceable if any legal action is ever needed!
When it comes to implementing Terms of Purchase for your online business, you want to make sure you’re including all of the applicable clauses to fully protect yourself, including 5 of the top hardest working ones:
- License To Use
A license to use clause is like renting a car – you don’t OWN the car, but you have the right to use it for a specific period and under certain conditions. You can drive it, but you can’t sell it, repaint it, or make major modifications to it because you’re only renting it.
The same goes for the products that you sell in your business. People aren’t buying the intellectual property of the product that gives them the right to do whatever they want with it.
Instead, they’re getting PERMISSION to use it in a certain way and with certain restrictions.
That’s what your license to use clause is for! This clause in your Terms of Purchase agreement specifies the terms and conditions of which a customer is granted the right to use certain intellectual property, software, or other assets that are being sold or transferred as part of the purchase.
The clause typically outlines the scope of the license being granted and clearly defines what rights the customer has to use, install, modify, or even distribute the product, depending on the terms negotiated.
If there are any restrictions involved, this clause lays those out very clearly as well, along with specifying the duration or term of the license.
- Intellectual Property
Online business owners who sell digital products are the most at risk to be struck by the copycats in the world. 😾
It’s so easy for someone to buy your digital product, create their own version of it, and re-sell it for their own financial gain.
As wrong as this is, it happens way more than you think and if you want to fully protect yourself against this insanity, an intellectual property (IP) clause in your Terms of Purchase agreement is a MUST!
This clause plays a crucial role in defining the ownership, rights, and responsibilities related to intellectual property assets involved in the purchase.
This includes patents, copyrights, trademarks, trade secrets, and other forms of intangible assets.
This clause helps protect the interests of BOTH, the buyer and the seller, by addressing various aspects of intellectual property within the context of the purchase agreement.
Ultimately, intellectual property is THE clause that can help legally protect you in the event that someone unfortunately steals your work and tries to rip it off for their own benefit.
- Refund
The phrase that no business owner wants to hear… “Can I get a refund?”
To avoid the annoyance of refund requests with your digital products, you want to include a refund clause in your Terms of Purchase agreement, which outlines the conditions and procedures of which a customer may be entitled to a refund or reimbursement for the product they bought.
The role of a refund clause is to establish a CLEAR framework for addressing situations where the customer may be dissatisfied with their purchase or where certain conditions have not been met.
Having this clause set up in the beginning allows you to properly respond to these unwanted requests and have a tried and true system that you can fall back on, instead of having to navigate each scenario separately.
- Chargeback
You’ve heard of refunds, but have you heard of chargebacks?
These sneaky little things are way more common than many business owners realize and they actually cost businesses up to $150 BILLION per year. 🤯
Chargebacks are basically the concept of someone buying your product, using it, benefiting from it, and THEN asking their bank to take their money back and return it to their account…
Sounds a little illegal right?!
Well, it’s not – just morally wrong, but trust me, that doesn’t stop people from doing it!
I have a whole spiel on chargebacks here so you can fully understand how they work and how they differ from refunds, but the most important thing I want you to know is how to avoid them altogether.
Having a chargeback clause in your Terms of Purchase agreement will establish the conditions under which a customer can initiate a chargeback, while also defining what a chargeback is within the context of the agreement.
In the unfortunate instance that a chargeback is initiated, the clause should also describe the process for how the dispute will be investigated and should detail the resolution, which may include a refund to the buyer or a correction of the issue.
- Dispute Resolution
You know when you’re playing Monopoly and you know EXACTLY how to get your player out of jail because it’s been defined by the rules of the game?
That’s what a dispute resolution clause in your Terms of Purchase agreement is like!
This clause serves the critical role of outlining the procedures that the parties involved in the agreement will follow to resolve any disputes that may arise during the course of the business relationship.
This clause helps to mitigate potential conflicts, establish clear guidelines for dispute resolution, and often encourages parties to resolve disputes amicably and efficiently.
Having this clause set up from the very beginning and defining the dispute resolution for your specific business allows you to respond confidently and know the exact steps to take when unfortunate scenarios arise.
How To Easily Implement Terms of Purchase For Your Digital Products
Now that you know which clauses work the hardest in your Terms of Purchase Agreement, it’s time to actually implement them.
You *could* spend hours of your precious time googling how to craft the perfect clause OR you could let The Boutique Lawyer do it for ya!
Our Terms of Purchase for Digital Products contract template, includes ALL of the hard working clauses listed above and MUCH more, so all you have to do is plug and play to add your specific business details, add it to your website, and you’re legally protected just like that!
And if you’re in need of other legal contracts to make sure your business is covered from top to bottom, click here to browse the shop and grab what you need!
