open up checkout_paypalipn.php and find this line
include(DIR_WS_LANGUAGES . $language . '/' . FILENAME_CHECKOUT_PROCESS);
it's around line 35 now after that line enter this code
// check for terms and conditions agreement
if ($HTTP_POST_VARS['agree'] != 'true') {
tep_redirect(tep_href_link(FILENAME_CHECKOUT_PAYMENT, 'error_message=' . urlencode(ERROR_NO_CONDITIONS), 'SSL'));
}
Hope this helps you....