These days, it is difficult for a business to function without an online presence. In the Wild West of internet business, you can take some simple steps to make sure you are protected legally.
1. Require Active Acceptance.
2. Reduce Liability through comprehensive disclaimers.
While catch-all lists that disclaim everything under the sun are often overly technical and unnecessary, it’s important to let users know what the site is not promising. (1) Warranty: Be clear that, while the business will provide the best service possible, it does not provide any explicit or implied warranty. (2) Errors: Clarify that the accuracy of the data on the website is not guaranteed and that the information contained in it (or in websites to which it links or refers) represents the best information available to those responsible for creating content. (3) Liability: Limit liability specifically by agreeing with the user that the website or business will not be liable for any damages under any cause of action. (4) Shutdowns: Disclaim any damages that could result from disruption of the users’ access to the website. Many professionals rely on specific websites for essential and sometimes urgent functions. They should understand that temporary unexpected shutdowns or shutdowns for maintenance will inevitably occur. (5) Validity: Courts consider a variety of issues in determining whether disclaimers are valid. For example, one court held a provision valid because it was written in capital letters and the entire agreement was sufficiently short to make it reasonable for users to read it (Recursion Software v. Interactive Intelligence, 425 P. Supp. 2d 756 (N.D. Tex. 2006)). These provisions should be emphasized to make users aware that the website is not promising more than it can actually deliver.
3. Follow Applicable Federal Regulations.
Regardless of the industry or website content, various federal regulations are certain to apply. Be familiar with the specific regulations governing the industry and include provisions in the Terms and Conditions Agreement that require users to comply where necessary. For example, websites are generally subject to special regulations under the Children’s Online Privacy Protection Act (COPPA) about what information can be collected from users under 13 years of age (http://www.business.ftc.gov/documents/bus84-childrens-online-privacy-protection-rule-six-step-compliance-plan-your-business#step2). Additionally, websites that serve as sponsors, provide advertisements, or make paid promotional statements for other products or services, are required under the 2013 FTC Update “.com Disclosures” to designate those communications by including the word “ad” or some other clear indication. These and many other regulations should be considered in drafting Terms and Conditions agreements, carefully following general guidelines as well as those specific to the industry.
4. Use Direct but Non-Technical Language.
5. Customize but Include Comprehensive Provisions.
While every business and website will have unique needs that must be covered by customized Terms and Conditions Agreements, most websites will be benefitted by including various comprehensive provisions. (1) Legal: Every business should consider including applicable law and forum selection provisions. Indicating the law that will be applied should a dispute arise allows the business to structure its activities both on and off line according to specific legal requirements that differ from location to location. Furthermore, these businesses will be able to reduce legal costs that are associated with litigation in a faraway venue by requiring plaintiffs throughout the world to bring suit in a convenient location for the business. (2) Site Content: Websites almost always include references and links to other sites, as well as substantial user-generated content over which the business may have little or no control. Terms and Conditions should include provisions that disclaim liability for content on other websites, and reference those websites’ separate Terms and Conditions. Provisions that set rules and guidelines for user-generated content are also important because they encourage appropriate use of the site and inform users that the content there is generally out of the business’s control. This allows users to take advantage of the site at their own risk, rather than exposing the business to additional liability. (3) Termination: Every Terms and Conditions Agreement should include a provision for termination such that the business and its website’s users can terminate the agreement when there is no longer a need to be bound by its terms. These provisions should be tailored to the business’s need for creating a long-term relationship with the customer (for subscription services, memberships, or interactive online communities) or for providing flexibility (for news media or informational sites).
6.Use the Terms and Conditions to Add Value.
Businesses can use the Terms and Conditions as an opportunity to inform the customer about policies and protections that benefit the customer while he or she is using the website. Many consumers have false ideas or unfounded worries about internet security and the stability of most websites. By including provisions that outline the steps taken to make the website a safe environment, businesses can eliminate some of those worries and reassure users that they can take advantage of what the site offers without dealing with the many disadvantages often associated with the internet. These provisions can include statements about the internet security that will be used to protect the website, the norms for user-generated content, or the protections provided for users’ accounts. Rather than limiting the Terms and Conditions agreement to an ominous list of imposing requirements on the user or disclaimers in favor of the business, take advantage of the opportunity to build the customer relationship.
7. Provide Protections for Intellectual Property.
If you have any questions, please feel free to contact us.