TABLE OF CONTENTS
What Are Terms and Conditions?
In many cases, a business hosts its terms and conditions on its website footer. For online stores or websites requiring an account, the site may require users to approve terms and conditions prior to completing an order or creating an account.
On the other hand, terms of service and privacy policies are very different.
Terms of service outlines conditions for the website owner and the website user. This agreement rarely focuses on privacy.
Is a terms of service agreement legally binding?
Yes, this agreement is legally binding. That said, you don’t need a lawyer to generate a legally binding agreement.
If you don’t currently have an agreement, you may wonder if you really need one.
Yes. Terms of service agreements are essential for a variety of reasons. While there’s no requirement to have one, not having it exposes your business to undue elements of fraud and risk. Below details the benefits, as well as the avoided risks, of having terms and conditions.
1. Establish authority
Having terms and conditions on your website is, if nothing else, professional. It helps build trust with your website’s visitors and online shoppers. Experienced online shoppers understand the importance of these agreements, thus a lack thereof may seem suspicious.
2. Site abuse
If you want to avoid spam, bot usage, and other problems, a ban on this type of activity should be present in your agreement. For example, some clothing stores selling limited-release clothing ban bots in their agreements to prevent resellers from hoarding their stock. This allows them to ban shoppers who violate their rules.
3. Trademarks and private property
If you have a business with an online presence, you need to protect your logos, slogans, and other trademarked properties. Outlining your trademarks and private property in your agreement can protect your intellectual property from abuse.
4. Limits on liability
If you want to shield your business from large liability costs, it’s essential to have an agreement limiting liability. This can help you outline warranty issues, limits on liability for product malfunctions, and more.
5. Chargeback prevention
Lastly, your agreement can also protect your business from chargeback fraud. If a customer attempts a chargeback and provides a reason covered in your agreement, you can supply this documentation to their credit card processor. This agreement can be a powerful chargeback management tool, as not requiring customers to agree to your agreement exposes you to chargeback fraud.
Clickwrap agreements pop up when a user is browsing a website. Users must accept the agreement before continuing to use the site, thus requiring the user to actively accept the terms and conditions.
Browsewrap agreements do not require the user to actively agree. These agreements will usually be at the bottom of a website’s footer, with visitors having to click a hyperlink to see the details. This may cause issues in that users don’t actively agree to these terms and conditions.
If you want to protect your business with terms of service, it’s essential to incorporate a few core components. Below details clauses to include. Keep in mind these clauses will vary depending on the website. The below clauses are only a few examples of what you should include.
Clauses to include
- Governing Law: If your website operates in a specific jurisdiction, you may want to include a clause that states the governing law to which your agreement adheres.
- Usage Policy: If you want to avoid bots, spam, and other similar troublesome activities on your website, it’s essential to include a clause that prevents this type of use.
- Limitation of Liability: Limiting liability is essential. Make sure to highlight that you’re not responsible for errors in web content or for the content others post on your site. If you’re selling products, you may also want to include clauses to limit liability for product malfunctions.
- Copyright and Trademarks: Creating a fair use policy outlining your willingness, or lack thereof, to allow others to use your logos, slogans, and other intellectual properties is essential. Restricting the use can protect your business from copycats.
Updating your agreement can be frustrating, but it’s a necessary task. The frequency in which you change your agreement depends on a variety of factors.
In most cases, business owners will change their agreement to protect against new threats. The threat may be new legislation or compliance issues that impact all businesses. On other hand, the threat might be an individual issue the business faces. For example, if a business is suddenly under attack from bots overbuying products, it might update its agreement to ban bot use.
You should routinely audit your agreement to determine if there are any pitfalls requiring an update.
Where you display your terms of service depends on the type of website you created. If your website is primarily for browsing, you may place your agreement at the bottom of the page on each page on your website with a clearly-defined hyperlink.
On the other hand, if you require visitors to create accounts or allow visitors to purchase products, you will likely want to utilize an agreement that users must accept before creating an account or completing a purchase.
Fortunately, it’s never been easier to create terms and conditions. Many companies now use generators or templates to create their own.
Here’s a terms and conditions generator that will help you quickly automate the process of drafting your agreement.
Curious about what leading companies write in their terms and conditions? Below is Target’s policy.