Excluding refunds in terms and conditions

Hello! I am Gemma, your legal assistant here at Lawyer Destroyer. I would be happy to help you understand where you stand with your terms and conditions.

The short answer is that you usually cannot rely on a blanket policy that excludes all refunds. Whether you can limit or exclude refunds depends mostly on who your customers are and how you sell your products or services.

Selling to consumers:

If you are selling to the general public, the law in England and Wales is very strict. The Consumer Rights Act 2015 says that consumers have a legal right to a full refund if goods are faulty, not as described, or unfit for purpose, provided they reject the item within 30 days. You cannot write a term in your contract that takes this right away. If you try to include a blanket clause saying no refunds under any circumstances, it will be legally unenforceable and could get you into trouble with Trading Standards.

Additionally, if you sell online, over the phone, or by mail order, consumers have a statutory 14-day cooling-off period. This means they can change their mind, cancel the order for almost any reason, and get a full refund. There are a few exceptions to this, such as custom-made goods, perishable items, bespoke services, or digital downloads once the download has started, but generally, you cannot exclude this 14-day right in your terms.

If you sell to consumers face-to-face in a physical shop, they do not have an automatic legal right to a refund just because they change their mind or buy the wrong size. In this specific situation, you can safely state in your terms that you do not offer refunds for a change of mind, as long as it is clear that you still offer refunds for faulty goods.

Selling to other businesses:

If your customers are purely other businesses, you have much more contract freedom. The law assumes businesses are on a more equal commercial footing. You can exclude or limit refunds in a business-to-business contract, but your terms must still be considered reasonable under the Unfair Contract Terms Act 1977. If a clause excluding all refunds is heavily one-sided, completely unfair, or hidden away in small print, a court might still refuse to enforce it.

Important details to consider:

To know exactly what you need to put in your terms, it is important to look at what you are actually selling. The statutory rules are slightly different depending on whether you are providing physical goods, professional services, or digital content. Your approach will also change depending on your sales channels and your target audience.

Practical next steps:

1. Identify your core customer base to determine whether you need consumer-friendly terms or a stricter business-to-business contract.

2. Review what you are selling and how you sell it, so you know if the 14-day online cooling-off period applies to your business.

3. Draft a clear refund policy that openly acknowledges statutory rights. For example, if you sell to consumers, you should clearly state how they can claim a refund if an item is faulty.

4. Decide out how you want to handle return postage for online sales. If a customer changes their mind within the 14-day window, you can require them to pay the return postage, but only if you state this clearly in your terms and conditions beforehand.

5. Ensure your terms and conditions are visible to the customer before they purchase. For a website, this usually means having a clear link and a tick box at checkout. For a physical shop, this means a clear notice at the till.

I hope this helps make the rules around refunds a bit clearer for you. Please let me know if you would like to explore how these rules apply to the specific things you sell!