If building a company is like building a house, consider the website or application Terms of Use your front door – users are welcome to come in but first, they have to open the door and walk through. Ensuring that your website has an effective and compliant set of Terms and Conditions of Use will help to protect both your company and your users. So let’s dig into the most frequently asked questions about these important agreements.

Is there a difference between Terms & Conditions (T&C), Terms of Use (TOU) and Terms of Service (TOS)?

No – T&Cs, TOU, and TOS are often used interchangeably and there is no legal difference. The name used by any given company is merely a matter of preference. These terms will be used interchangeably throughout this article.

Are Terms of Use the same as a Privacy Policy?
No - Both TOU and Privacy Policies are important to have on your website, app, or platform but they are different documents with different legal functions.

What are Terms of Use?
TOU are a set of rules and guidelines that govern the use of a website, app, or online platform. They establish the contractual agreement between the business providing the services and the users who access or use the service.

 What are the different types of Terms of Use Agreements?
There are two main types of TOU Agreements:

1. Browsewrap Agreements: These are the most common Agreements, where the TOU are on the website, app, or platform itself and are connected to the main page by a hyperlink. This is less secure and enforceable but usually sufficient for most websites, apps, and platforms.
2. Clickwrap Agreements: This is a little different because the terms are actively placed in front of the user via a pop-up on the website. This ensures that the user sees the terms and actively agrees to the terms before they can proceed. This is the more secure and enforceable of the agreements, but it can be off-putting for some users.

Why do businesses need Terms of Use on their website?

There are five key reasons why you should have a TOU on your company’s website, app, or platform. Defining the reasons why you should have them will help you define what needs to go in them.

1. Legal Protection: A well-written TOU outlines the rights and responsibilities of both the company and its users. It helps protect the company legally by setting forth the rules for using the website, app, or platform, governing disputes, limiting liabilities, and specifying applicable laws and jurisdictions.
2. Prevent Abuse: The TOU acts as a contract between the company and its users, establishing the terms under which users can access and use the website’s services or content. It informs users of what is expected of them and what they can expect from the company.
3. Intellectual Property Protection: The TOU can include clauses that protect the company’s IP rights, such as copyrights, trademarks, and patents. It specifies that users can use the company’s IP and what actions the company can take in the case of infringement.
4. Dispute Resolution: The TOU typically outlines procedures for resolving disputes between the company and its users, such as through arbitration or mediation. This can help streamline conflict resolution and avoid costly litigation.
5. Build Trust with Users: Clear and transparent terms demonstrate the company’s commitment to openness and honesty. When users understand the rules and guidelines governing their interactions with the company’s website or services, they are more likely to trust the company’s intentions and actions.
   

What should be included in the Terms of Use?

The key components that should be in a well-written TOU typically include:

1. Acceptance of Terms: This section informs users that by accessing or using the website, app, or platform they agree to be bound by the TOU.
2. Description of the Service: This section outlines the types of services provided by the company, including features, functionalities, payment rails, and any limitations.
3. User Conduct: These are guidelines on what the company expects from its users while using the website, app, or platform, including prohibition on illegal activities, harassment, spamming, reverse engineering, and misuse of the website app, or platform.
4. Intellectual Property Rights: Information about the information and rights related to the content, trademarks, logos, and other intellectual property associated with the website, app, or platform.
5. Disclaimers and Limitations on Liability: When things go wrong, people want to know who to blame. If you do not include this section, people may want to go after you! This section will limit the company’s liability for damages, errors, interruptions in service, or inaccuracies in content. This section may also include disclaimers regarding the accuracy or completeness of information provided by your website.
6. User Accounts and Registration: The section tells users how to create an Account, what information is necessary, how you keep their account secure and what responsibilities you expect of your users.
7. Payment Terms: If you offer paid services or products, this section outlines who you’re working with, how you work with them, what information you need, where you keep it, and important details about the payment terms such as pricing, billing, payment methods, and subscription terms.
8. Termination and Suspension: Sometimes things don’t work out and you may need to terminate or suspend a user from your website, app, or platform. This section will govern under what conditions you can terminate or suspend a user’s access to the website, app, or platform, as well as the consequences of such actions.
9. Governing Law and Jurisdiction: Specification of which laws govern the agreement and which jurisdiction will have authority in the event of any disputes.
10. Changes to Terms: The only universal constant is that everything changes – this section allows you to change your TOU and how users can accept or reject these changes.
11. Contact Information: If a user doesn’t like what they see, this section tells them how to file a complaint or send an inquiry.

How often should Terms of Use be updated or reviewed?

There’s no set time frame for how often you should review or update your TOU but there are a few circumstances that require you to do so.

1. Change of Law: any time a law changes that affects your industry, you should make updates to your TOU to reflect that change.
2. Change of Business Model: any time you update how your business works, you need to update your TOU. This is one of the biggest red flags for Regulators – what you’re telling your users you’re doing has to actually match what you’re doing!

A good rule of Thumb is to internally review your TOU quarterly and have your attorney review them formally at least once a year.

‍Can’t I just copy and paste another website’s Terms of Use?‍

As tempting as this may be - No, you shouldn’t simply copy another website’s TOU.

1. TOU are copyright protected, so copy and pasting from another company’s website could lead to legal issues.
2. These documents are crafted to reflect the specific policies, legal requirements, and practices of the particular website or service they govern.

It's important to create your own TOU that reflect your company’s product, practices, and legal requirements. If you’re unsure about how to proceed, consult with an attorney who can provide guidance on creating bespoke TOU that fit with your business model.

How do I draft compliant Terms of Use for my website?

‍It’s always best to work with a legal professional to ensure your TOU agreement follows the law. You can also write your own and have it reviewed by an attorney to ensure you’re protected.

If you’re looking to get your TOU drafted for your website, app, or platform, consider consulting with an attorney at Founders Law today.

Erika Knierim is a startup and venture capital attorney based in Chicago, IL. She represents founders, startups and venture capital funds in a wide variety of corporate transactions, including raising capital and navigating issues associated with rapidly-growing startups. She can be reached at eknierim@founderslaw.com.

The opinions and recommendations expressed in this article are the opinions of the individual author and do not constitute legal advice or recommendations by Founders Law LLC. No attorney/client relationship or engagement is intended to be, or can be, created by the review of this content. Individualized advice can only be provided after a review of the circumstances of your business or matter.