Ts & Cs usually have to be reasonable, they couldn't put in there "if you wish to get your phone back you'll have to give us your car as payment" for example, if they did it wouldn't hold up in court. The question is whether them having the right to inspect the phone and alter their offer price is fair and if £8.95 is a reasonable cost to process and send the phone back to you, really I think that is pretty reasonable. Maybe the practices of under offering almost every phone regardless of condition are a bit shady though.