Anyone who has registered on a website has seen the “I Agree” checkbox at the end of the process. You can’t register unless you agree to the website’s Terms of Use. Whether you run your own website or just register on other websites, you may wonder, are those Terms of Use really necessary?
When you run a website, many legal problems can crop up. A website without a Terms of Use agreement is likely to fall prey to things like accusations of copyright and trademark infringement, trade liable, fraud, and unfair competition. A Terms of Use agreement is not just a good idea, it is critical to protecting you as a website owner.
When you’re using a website and click “I Agree” or “I Accept” next to the Terms of Use, you are forming a binding legal agreement—a contract—between you and the website owner.
Clicking on a button to “sign” a contract has been upheld many times in court, but if you’re a website owner, you need to be sure to design your website so that your Terms of Use form an enforceable and binding contract. (If users don’t register on your site, and so don’t click an “I Agree” button, it is harder to enforce your Terms of Use as a contract, but they are still important.)
Here are five big reasons website owners should include Terms of Use on their websites:
1. Disclaiming Warranties
Your Terms of Use can disclaim warranties, so that users can’t blame you if something goes wrong. For example, a user could claim that they were infected with malware from visiting your site. Or they might sue you because your website was down for a time and they were relying on it for their business.
2. Defining Permitted Conduct
Your Terms of Use can define what users are permitted to do with the content of your website. Put another way, the terms define the scope of the license that users have to use your content. They also define what user-generated content people are allowed to upload or submit to your site. This is critical for websites that allow users to submit comments or upload media files.
3. Covering Your Legal Costs
Your Terms of Use can require that users indemnify you if they violate anyone else’s rights. That means, for example, that if a user uploads a file that violates someone else’s copyright and you get sued, the user must pay all of your legal costs.
4. Limiting Damages
Your Terms of Use can limit the amount of money that someone could obtain from you in court, even if they got around some of the other provisions like the disclaimer of warranties.
5. Resolving Disputes
Your Terms of Use can require users to handle disputes in certain ways, so that you don’t end up being dragged into court in a far-away state. For example, you can require that users rely on mediation (which is much less expensive than court), or you can require that any court action must be in your hometown.
These five points touch on just a few of the ways that a Terms of Use document can protect you as a website owner. If you implement one properly and keep track of how and when users click to accept your Terms of Use, you’ll go a long way to protecting yourself from legal troubles as a website owner.