6 Key Reasons Your Digital Product Needs a Terms of Purchase

We’re all guilty of this one thing…

The thing where you’re buying something online, click “add to cart”, head to the checkout page, and without even acknowledging the fine print, we click the box that says “I agree to the Terms and Conditions” and move on with our pretty little day. 

As a lawyer, I might be among the very few people on earth who actually clicks the hyperlink to see what the Terms and Conditions actually say.

I can’t help myself! I need to know what i’m getting into whenever I’m buying anythingggg online. 

Regardless of whether or not you read the T&C when purchasing something, it’s imperative that your digital product has them. 

Now, simply having this legal agreement doesn’t guarantee that your buyers will read them, but the important thing is that you do YOUR part as a seller. 

And no, this isn’t just to add to your already overflowing plate as a business owner. There is real reason to crafting and implementing proper Terms and Conditions for your digital products and in this blog post, you’ll learn why.

What Is A Terms Of Purchase Agreement?

First things first, let’s simply break down what exactly a Terms of Purchase Agreement even is.

Terms of Purchase is often referred to as Terms and Conditions and the best way to think about this legal agreement is like a rulebook for a game.

It sets the ground rules and expectations for how your customers can use your products while simultaneously providing a safety net for you as the business owner. 

Just like in a football game, when there’s a dispute of any kind, the referees refer to the rulebook for their final call. The same goes for your business – if or when you run into a problem of any kind, you can turn to your business owner “rulebook” to determine your plan of action for resolution. 

Essentially, a Terms of Purchase Agreement outlines the specific terms of a transaction for either physical or digital products and covers policies that are a part of the purchase process, such as refunds, chargebacks or cancellations.

6 Reasons Your Digital Product Needs a Terms of Purchase

1. Legal Protection for Both Parties

Many times when people think about the legal side of business, they have the misconception that the benefit is only on the customer side. The reality, however, is that most legal things directly benefit YOU as the business owner, too!

And that’s definitely the case for a Terms of Purchase agreement. This agreement outlines what customers can expect from your product and what you expect from them in return, reducing the likelihood of misunderstandings and disputes.

2. Clarity on Usage Rights

One huge downside of the digital product world? Copycats are everywhereeee and it’s super easy for someone to buy your product and then resell it as their own. 

Trust me, as a lawyer I see and hear about this happening ALL. THE. TIME. 

As a digital product seller myself, this is insanely frustrating and can often make people weary of joining the digital product world. 

But guess what? Your Terms of Purchase is one of the first lines of defense for copycats and people who try to resell your products. 

Digital products come with various usage rights and your Terms of Purchase should specify how customers can use your product, whether for personal or commercial purposes, and any restrictions.

This clarity is vital to prevent misuse of your product and protect your intellectual property and having this intact gives you the ability to take the appropriate legal action that’s needed if or when someone violates your rules. 

In addition to your Terms of Purchase, you can also implement a long-form copyright notice on your digital resources to send a clear message and tell users exactly what they can and can’t do with the resource they’ve downloaded from you. 

➡️ For an easy guide on how to implement that, download the free Copyright Notice Template to start protecting your digital products from copycats just like a lawyer would.

3. Liability Limitation

Another big concern as an online business owner is that a customer or consumer will try to hold you accountable to certain claims that your product or service promises. 

For example, let’s say you’re a health and wellness coach and you work to help clients improve their metabolism through your courses. 

Some of the benefits to what you teach could be that your clients lose weight, build muscle, improve their sleep quality, etc.

While it’s true that what you teach through your course *can* bring those benefits to your clients, it’s not guaranteed, which means that your Terms of Purchase needs to clearly state the scope of your responsibility regarding the product, helping to shield you from potential legal claims related to product performance or outcomes.

This can directly prevent you from being financially responsible for someone’s purchase when or if they don’t receive the results that they expected when they bought your product.

➡️ In addition to including this terminology in your Terms of Purchase, it’s also wise to display a Disclaimer on your website as well!

4. Defined Refund and Return Policies

A huge question that comes up in the digital product realm is, “how do I handle refund requests?”

My answer? You don’t! Okay, technically you do… but you do it beforehand through your Terms of Purchase.

Digital products aren’t like products that you buy on Amazon. You can’t purchase them, try them on, and then decide if you want to keep it. 

Instead, digital products are delivered right away, giving your customer instant access to your product, which means they could potentially use and benefit from the product as soon as they click purchase. 

It’s for this reason that clearly defining your refund or return policies in the Terms of Purchase is a must, as it helps manage customer expectations and prevents potential conflicts over unsatisfactory products.

➡️ Not sure how to craft an effective “no refund” policy? I’ve got you!

5. Compliance with Laws and Regulations

Let’s be real… when you decided to become a business owner, you probably didn’t study up on all of the laws required to do so, did you? No shame here! Most of us learn as we go and make corrections along the way.

While the scrappy business owner life is a perfectly fine life to live, it’s important to know that digital sales are governed by a myriad of laws, including intellectual property rights, consumer protection, and data privacy.

Because of this, having a comprehensive Terms of Purchase will ensure that your business complies with these regulations, safeguarding you from potential legal issues.

➡️ For more on how to sell online without getting sued, CLICK HERE for a free guide!

6. Framework for Dispute Resolution

Even with all of the required legal agreements in place, the reality is that disputes are going to come up. It’s inevitable and if you’re a non-confrontational queen, that might scare you a little bit. But it doesn’t have to!

In the case of any disagreements, your Terms of Purchase can provide a clear path for resolution and help you clearly craft your responses.

And there ya have it – 6 key reasons that you shouldn’t skip setting up a Terms of Purchase Agreement when selling a digital product!

It really can protect you and save you a heck of a lot of headaches more than you know.

Now that you know WHY you need it, you’re probably wondering HOW you do it and WHAT exactly you need to include!

This blog post walks you through the 5 hardest working clauses in your Terms of Purchase, but if you’re not the DIY type and want an easy solution, this contract template is for you.

Oh and if you’re an Etsy seller specifically? Read this!

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If we haven’t had the chance to *virtually* meet yet, hey I’m Amber – not a regular lawyer, but a cool lawyer that helps online business owners sell without getting sued. 

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