How to Write Website Terms of Service (Terms of Use or Terms and Conditions)



Why do we care about a web site's Terms and Conditions? Everyone knows that a site should have legal Terms. Few people go through the obvious question: Why?

While our statutes, regulations and past cases are full of laws and their applications when considering everyday interactions, few laws and cases exists for online interactions. Why? Our cyber universe, as a mature legal arena, has existed for only some ten or fifteen years. When than the centuries of "real world" interactions, its easy to understand why many legal "holes" exists in our system.

Under US law, these legal "holes" are filled up with with either judge-made interpretations or privately drafted contract law. Given that on any single day, a judge reviewing an online case may have come from family, criminal or juvenile courts, we would rather leave as little for judges to select their on as possible. We achieve this through proper negotiation, drafting and implementation of site Terms.

The Common Mistakes

Failing to realize that web Terms are privately negotiated agreements, most web site operators make three common mistakes.

They Copy Other Sites' Terms: The most widespread way for site administrators to "draft" site Terms is by copying it from other sites. Worse, they copy it from some site touting its Terms as a standard that once edited work extremely well by anyone. Why? because, few administrators understand how important these Terms are. Fewer still understand the impact Terms have on every single future online dispute.

They fail to Negotiate the Terms: The most widespread mistakes made by site administrators is believing that if they post Terms via the internet, they will bind visitors. That is the same as posting mortgage papers on the wall of a bank and believing that everyone who enters will be bound by those documents. Web site Terms must be negotiated to be valid. This can be a critical component of online compliance; few, however, understand how online negotiations take place.

The Risk of Non-Compliant Terms

In our representation of online companies, we see four main areas of risks faced by clients. These risks are easily avoidable; however, caused by a lack of understanding risks often mature into costly if not destructive forces for a young company.

Many online companies unknowingly make promises to online users that they never intend. I've seen clients with subscription based pricing models having copied Terms relevant only to one time charge sites. Hence, they were liable for wrongful charges. Some clients with upstart e-tail sites, ended up making consumer support promises which only the like of Amazon or Buy.com could make.

Administrators facing personal liability. Hard to believe, but when Terms are drafted improperly the owners and operators of sites can face liability personally, not just as a corporation.

Step 1: Define Your Goals

It may sound strange, but before you can start drafting any Terms it is advisable to figure out what your goals are. The Terms must reflect your goals. More importantly, they ought to avoid saddling you with unnecessary obligations.

Step 2: Where is Your Liability?

Once you figure out what your goals are, you need thinking about where potential liability can come from.

If you're developing an affiliate marketing campaign, you face liability from potential false advertising and product liability.

Step 3: Define Your Customer's View

It's one thing figure out what you want. It's quite one more thing to figure out what your customer wants to achieve. Don't forget what we said earlier on: A web site's Terms is a negotiated agreement. It can never be one sided or it risks being thrown out by a judge. get more info So what do your customer want?

Step 4: Enable through Negotiation

So exactly how should we put everything together? How do we enable our goals, while minimizing potential liability and allowing for customer wishes? We negotiate with the customer. I know this sounds strange. How can you ever negotiate with a visitor to a splash page?

Step 5: How to Make Changes?

Make no mistake - of one thing. You'll must carry out ongoing changes to your Terms. Not only are your business practices likely to change over time, online laws change on a regular basis. As online legal cases make it through the court system, we must incorporate into existing Terms any new legal interpretations and findings. Failing to do, assures us of stale and irrelevant Terms. Basically, absent amendments to our Terms, the goals we set up earlier while minimizing liability will be ineffective.

Once you design an overall compliance strategy, examine your business' liability exposure and being able to incorporate an online liability management system based on both domestic and offshore corporate structures.

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