While certainly the most boring part of a website, a well crafted Terms of Service Agreement and Privacy Policy can be critical in protecting a website owner from liability.  Both the Terms of Service Agreement and Privacy Policy should be tailored to the type of business being operated.  However, the general theme of both the Terms of Service Agreement and Privacy Policy is to set forth the rules for using the website and to protect its owner from liability.

In this first part of a two part series on protecting your website from liability, we will discuss the 411 on Terms of Service Agreements for business owners.

What is a Terms of Service Agreement?

A Terms of Service Agreement is a protective contract that sets rules and regulations for users of your website. Terms of Service Agreements are also called “Terms of Use” or “Terms and Conditions” agreements.  These agreements, if drafted correctly, oftentimes will protect a website owner from frivolous lawsuits by disgruntled users.  

Who Needs a Terms of Service Agreement?  

The short answer is anyone operating a website should have a Terms of Service Agreement.  Generally speaking, there are two types of websites.  The first being solely informational wherein users can browse the website for information but have no other interaction with the website or its owner.  While informational websites have a lesser risk of litigation, they are not completely without risk.  Typically, legal claims arise with informational websites when the user relies upon the information contained in the website and suffers some sort of loss.  As a result, a Terms of Service Agreement is necessary.  

The second type of website can be labeled as interactive.  Interactive websites are those that allow users to interact with the website in various ways such as buying products (Amazon, eBay, etc.), exchanging information (Wikipedia), and connecting with other users (Facebook, Twitter, Instagram, etc.).  Because interactive websites are typically collecting information regarding the user, it is imperative that the website owner include a Terms of Service Agreement.  

What Terms Should be Included in a Terms of Service Agreement? 

While the specific agreement must be tailored to your business, the following are some of the primary elements which should be included:

• A clear and detailed provision stating that the business bears no liability for any damages the user suffers as a result of reliance on the information.  

• A choice of venue clause stating that all claims arising out of the site must be litigated (or arbitrated) in the state court of your choice.  

• The terms associated with creation and access of user accounts that may be created through the site.  

• If the website allows users to submit content, the Terms of Service Agreement should include language specifying that any derogatory or illegal material and/or harassing comments will not be tolerated and may be removed.  Additionally, if users are permitted to submit content, language should be included to inform the user that such submissions automatically become property of the website owner. 

• A provision forbidding the use and/or dissemination of the website owner’s copyrighted material.  

Is a Terms of Service Agreement Enforceable? 

While various courts have differed over the enforceability of Terms of Service Agreements, the overarching theme is that it must be clear to the user that the website owner is attempting to impose the Terms of Service.  Generally speaking, courts are more likely to uphold a Terms of Service Agreement where the user is required to click an “I agree” box after being presented with a list of terms and conditions of use.  In other words, the user must make some sort of affirmative action that the user is agreeing to the Terms of Service Agreement.  

In conclusion, best practices suggest the inclusion of a Terms of Service Agreement on all websites. If well tailored, a Terms of Service Agreement can protect the website owner from unnecessary headaches and liabilities.  

April Slokan Oliverio is Of Counsel at Jordon Voytek. She focuses her practice on mergers and acquisitions, and business formations and governance, as well as general corporate advice and assistance.  She is available to assist businesses of all sizes with their day-to-day legal needs. To contact her please contact April directly at April@JordonVoytek.com, or by phone at 304.216.2119.