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Terms of Use Agreement: The Definitive Guide

If you’re looking at building a website, online store, or software you will no doubt have noticed that most, if not all, businesses have a section dedicated to terms of use and linked in their website footer.

Usually fairly lengthy and sometimes hard to understand for those of use without a legal background, terms of use remain essential for any website owner and when properly drafted, are legally binding.

Expert tip: Take the hassle of writing your own terms of use agreement away with our terms of use generator. It will save you hours of work and possible costly legal mistakes.

What Are Terms of Use?

Terms of use agreement is a document that sets out the rules and conditions that one must abide by when using a website, mobile application, software, service, or product.

In simple words, it sets out what is considered acceptable behavior on your website. What users can and can’t do, removes any ambiguity or uncertainty when it comes to liability, protects your intellectual property, and encourages communication and transparency with your customers.

Terms of Use vs Terms of Service

The expressions “terms of use”, “terms of service” and “terms and conditions” are often used interchangeably, which can lead to confusion.

However, some will make a distinction between these expressions, interpreting that terms of use or terms of service are the guidelines that apply to all website visitors whereas terms and conditions apply to people who have purchased or paid to use a service or a product.

Who Is Responsible for Drafting Terms of Use?

Terms of use are drafted by the service operator or its legal counsel. They are, after all, the rules that govern the use of your services, which means that you are the one that gets to decide what guidelines you wish to implement.

When drafted properly, they constitute a contract which is why drafting terms of use should not be taken lightly.

Moreover, terms of use should be reviewed and updated regularly to ensure that they are in line with applicable laws that may evolve over time and that they address any potential issue that could arise due to someone using your products or services.

Why Do You Need Terms of Use?

Not everyone is well-mannered or intended in the online space. Should someone use your services in a way that contravenes your terms of use, you will be able to enforce these and limit the damage that that person could do.

You could, for example, suspend someone’s account, delete their abusive comments, or moderate a discussion. That is if it is provided for in the terms of use that your users have to agree to, of course.

This is especially handy if users can share content such as images, videos, or comments on your website. Having clear guidelines as to what type of content is acceptable and what would lead to content being taken down will allow you to maintain your brand image and limit user frustration as there should be no surprises as to what constitutes prohibited usage.

Know the rules note on a keyboard

Terms of use can also be useful in excluding or limiting your liability if you include the proper disclaimers and limitations.

Indeed, someone could put the blame on your website and claim damages from you, which could be costly if you forgot to include a proper limitation of liability and disclaimer. They can also act as a deterrent as your users will know that they are surfing your website or using your services they are doing so at their own risk.

You can also choose how and where disputes should be handled. For example, if your business is headquartered in California, you may wish to specify that any dispute will fall under the jurisdiction of the California courts or you may decide to subject all disputes to an arbitration process.

What to Include in Your Terms of Use?

Your terms of use can be very detailed or straight-to-the-point. After all, it is your website and you make the rules. But they should be clear and understandable so as to form a legal contractual agreement. And they should address any potential concerns that exist due to the specific nature of your business.

Date & Acknowledgment

Your terms of use should start by mentioning the date from which they are in effect as well as mention that by using your website or your product, your customer acknowledges and agrees to your terms of use, thus creating a legally-binding agreement.

Reference to Other Policies

Most terms of use will refer to a business’ other policies, such as a privacy policy or license agreements, and include a link to it to encourage users to read through these as well.

Eligibility

If one has to be a certain age or have parental consent in order to be able to use your website, products, or services, you should mention it. If your platform is globally accessible, you may wish to specify that a user has to be able to form legally binding contracts in order to use your products or services, which may vary from one jurisdiction to another.

Prohibited Uses

This is where you would address any use of your website, products, or services that you consider prohibited and that could lead to consequences.

Generally, this includes reprehensible conduct such as sharing or reproducing your work without prior authorization, transmitting spam, uploading viruses or using your website or services to distribute offensive or inappropriate content, using your website or service for illegal purposes, impersonating someone else, or using your content to pretend to be associated with your business.

If you allow users to create accounts, you should specify that an individual that goes against your terms of use may see their account terminated or suspended at your sole discretion.

It’s also a good idea to create a separate acceptable use policy for an extensive list of activities you would like to avoid.

Service Interruption

If you provide an online service or software, you may wish to specify that you could stop providing that service at any time, which could help limit your liability should a user be relying on your product or service as part of their work, for example.

This should include mentioning periodic maintenance or updates or technical issues that could cause a temporary shut down of your website or services.

User-Generated Content

If you own a website that allows users to upload and publish their own content on your platform, you may wish to have a paragraph that addresses this.

For example, you could specify that by uploading content to your website, users warrant that the content is their own or that they have the right to use it without infringing on anyone’s copyright.

Limitation of Liability and Disclaimers

Probably one of the most important clauses that you can include in your terms of use is a limitation of liability clause, which will do just that: limit the maximum amount that you or your company could be held liable for should a user suffer damages from using your website, service or product or their inability to use it.

You may also want to include disclaimers to disclaim your liability in regards to specific events such as third-party links, viruses that a user may contract due to visiting your website, or the accuracy of the information presented on your website.

A commonly-used disclaimer in the online services and software industry is the “as-is” disclaimer.

By including the one you are telling your customers that the service that you provide is on an as-is and as-available basis - in other words, you do not provide any guarantees in regards to your service and they are using it at their own risk.

Intellectual Property

You can include a clause that reaffirms your intellectual property rights over your website and its content, including elements such as software, images, videos, patents, trademarks, and which can link to a more detailed intellectual property policy if you have one.

Standard Contractual Provisions

Most terms of use will specify the governing law of the terms of use agreement and provide detailed contact information that can be used to request more information.

It is also a good idea to specify that you may amend your terms of use from time to time and in that event, you will notify your users and request their consent.

These are just some of the provisions that can be found in terms of use.

However, the nature of your business may call for additional clauses such as billing or shipping policies, or a mention regarding your DMCA takedown process, for example.

Have a look at this article for some great examples of terms of use from the biggest online brands and businesses as well as a template that you can customize and use on your website.

Where to Display Terms of Use?

There are different approaches when it comes to displaying terms of use on a website. One is to simply use a browsewrap agreement and display a hyperlink in the website footer titled “terms of use” which brings a user to a separate page where they can learn more about your policies.

However, more and more businesses are requesting affirmative actions from website visitors and setting up a pop-up or checkbox requesting that the visitor agrees to the terms of use before using the website or product, like this:

Accept terms of use example

Using a clickwrap agreement is a good idea as you are prompting users to actively confirm that they have read and accepted your terms - which would make it more difficult for them to claim ignorance should there be a dispute later on.

A good approach is to include a link to your terms of use in your website footer and to also reference them at important stages of the customer journey, such as account creation, checkout, or when downloading your product.

Wherever you choose to display your terms of use, they should be conspicuous and easily accessible.

How to Enforce Terms of Use?

The easiest way to make your terms of use enforceable and have them hold up in court is to require active consent from your users. This can be done by using a clickwrap agreement, as mentioned earlier, asking users to tick a checkbox that says something like “I have read and agree to the terms of use”.

To protect your business, you can set up a pop-up to bring attention to your terms or require consent at major steps of a visitor’s journey through your website.

If you have an e-commerce store, for example, you may wish to request acceptance of your terms during the checkout process, before a customer goes through with a purchase.

It’s best practice to highlight any important or unusual terms, such as payment or refund policies. If you own a blog, you may wish to highlight what content you consider inappropriate at the time of account creation.

By doing so, you will be able to restrict access to your website or delete someone’s account if they do not respect the rules that you have set out in regards to how your website should be used, as they will have actively consented to your terms of use as a condition to browsing your website.

Final Words

Whether you are just starting out in the online space or are an established business looking to update its policies, we hope that this article highlighted the importance of having thorough terms of use to protect you against lawsuits that could be easily avoided.

This should not be taken lightly and could save you time and trouble in the future. Not to mention the fact that having easily accessible terms of use will help you build a relationship of trust with your users, as you will be transparent as to the rules that govern your business relationship.

Don’t waste time writing legal documents yourself and avoid costly mistakes others make. Create a dependable attorney-drafted terms of use agreement custom-tailored specifically to your needs in just a few minutes with our online generator.