If your business has a website, and particularly if you have an interactive website, you need terms of service. Terms of service may be the stuff nobody ever reads when they visit a website, but they can be pretty important. Essentially, terms of service are a contract between your business and visitors to the website, governing the relationship between your company and users of your website.
The manner in which you present your TOS to visitors will play a big role in how binding and enforceable they are. They are most likely to be enforceable if the TOS appear prominently anytime someone visits the website, state that they are a binding and enforceable contract between the website operator and the visitor, and require the visitor to click on a box that says “I Accept” or “I Agree.” A step or two below that is to have a prominent statement that use of the website is governed by the TOS, with a link to the actual TOS. Having a pop-up TOS is not a very effective method, because many users configure browsers to block pop-ups, or they are highly conditioned to ignore pop-ups. It is also relatively weak to merely have a link somewhere to the TOS, labeled as such. You should phrase the TOS in plain language that the average person can understand, rather than using impenetrable legalese.
If you are going to follow the method where someone clicks a box indicating their acceptance of the TOS, it is important to have a means of recording that acceptance and archiving it. If there is a dispute later, you will then be able to show that the user actively consented to the TOS.
The list of items that should be included in your TOS is pretty lengthy, but here are some key items:
A very clear statement that the TOS are a contract, and that the user is agreeing to the TOS by visiting the website. Also, make sure to mention that the TOS may be updated from time to time, and the latest version of the TOS will govern.
You’ll want to prohibit any kind of access to the website, automated or otherwise, for anti-competitive purposes. For example, you don’t want your competitor to “scrape” data from your website.
There should be a choice of law provision, stating which jurisdiction’s laws apply. If you have several locations, or if your servers are located in another state, you should review each state’s laws to see which will provide the best protection.
Include a statement that the user consents to electronic communication.
Include a provision that the user is responsible for safeguarding his username and password, if any, and that you will not be liable for any loss suffered because of his failure to do so.
Many websites allow users to upload user-generated content, so you will want to explicitly ban any kind of abusive, harassing, threatening, illegal, or objectionable content. You also want to reserve the right to unilaterally remove any such offensive content, and to disable the user’s access if they violate your TOS.
Also keep in mind that the European Union has very strict laws regarding website privacy and consent issues. If your website requires user registration, you should include a mechanism for determining the user’s location and enable more stringent consent procedures to comply with applicable laws in Europe.
Finally, make sure to include provisions relating to the Digital Millenium Copyright Act (DMCA) in the TOS. The DMCA provides a safe-harbor from copyright infringement for website operators, so long as there is a process where a copyright owner can complain of infringement. The website operator is then obligated to take down the material in question, to avoid being considered a co-infringer. The website operator must post a DMCA policy, act on takedown requests, terminate the accounts of repeat offenders, and register a DMCA agent with the US Copyright Office. The DMCA agent is required to receive and promptly act upon takedown requests. Having a DMCA policy and procedure is crucial for websites where users may upload videos, music clips, or blog posts.
This might seem like a hassle that isn’t really mission-critical, especially if your startup is lean and everyone is focusing on getting your product up and running. Visit some major websites, however, like Google, Yahoo, Facebook, Twitter, Microsoft, and Apple. They all have terms of service. It may indeed be a hassle, but having effective and clear TOS will end up protecting you in the long run.
UPDATED: You also should consider including a term that the visitor to your website agrees not to post negative or disparaging reviews or comments regarding your company, especially if you are selling some product or service. This is a relatively new trend, and as far as I know, these clauses haven’t been fully reviewed by any courts. But given the importance of review sites and the harm that negative reviews can inflict, it is certainly worth considering.
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