Paul Horton: Terms of Use Terminology

If you are familiarized with Privacy Policy Fundamentals, you should consider some of the common clauses and terminology that are located within the Terms of Use. This information is provided for you by a Terms of Service Lawyer. The Terms of Use Agreement (aka: Terms of Service; Terms and Conditions) lays out the rules that website Users must follow when accessing the site, selects the governing law, and limits the liability of the website owner, among many other things. Every website should have a Terms of Use in place, so it is important to understand the components contained in these agreements.

While it is good practice to draft the Terms of Use in “layman’s terms,” the agreements can still be difficult to digest. Below is a high-level breakdown of fifteen common clauses and terminology that appear within Terms of Use Agreements:

Owner – The first thing a Terms of Use should do is name the website’s owner (whether individual or corporate) so that Users know who the website belongs to.
Modification – Next it is important to reserve the right for the website to modify the terms at any time.
About the Website – This serves as a brief overview of how the website functions. What is the purpose of the website? What kind of services does the Website offer? It is important for Users to understand what the website does in a nutshell.
Warranties and Representations – You want the User to warrant (i.e. validate) that they are at least a certain age, typically no younger than 18. This protects the website owner from legal ramifications stemming from underage Users.
Ownership of Website and License – Alerts the Users that the website owner has ownership (makes sense) of the website and associated content. Users are only granted a limited license to use the website for purposes stated in the Terms of Use.
Account Creation, Payment, & Termination – Users need to know how to create and cancel their accounts on the website. Users also need to know how payments are processed and by who. It is important to make clear that Users are solely responsible for keeping their account accurate and secure.
User Generated Content (“UGC”) – This. Is. HUGE. If the website has any type of UGC, whether it is elaborate forums or simple reviews, there must be a UGC clause. This clause indicates that Users own their UGC, but warrant that they will not upload any infringing (i.e. illegal) material. It is also important for the website to be able to remove UGC at any time for any reason.
Communications Decency Act – For liability purposes, websites do not want to be considered interactive computer service providers. If a User gets in trouble, the website wants to avoid getting in trouble too.
Third Party Links & No Endorsement – Any links that go outside the website are not endorsed by the website in anyway.
User Conduct – While the Terms of Use essentially centers upon User conduct, this is the clause that really spells everything out. Any activity (i.e. using a spider/scraper; threatening another user; transmitting illegal material; etc.) that the website does not want Users to undertake should be explicitly listed here.
Disclaimer of Warranties & Limitation of Liability– “Disclaimers” foreclose responsibility and limit liability on behalf the website. These clauses include disclaimers that limit liability for any harm arising from the website, any errors or interruptions with the website’s services, and any damages that could result from liability, among others.
Indemnification – To “indemnify” means to make compensation for incurred hurt, loss, or damage. This clause establishes that in the event of infringement, personal injury, or death that results from a User’s use of the website, the user will indemnify, or compensate, the website.
Resolution of Dispute and Governing Law – This clause allows the website to select what state’s law governs the Terms of Use and where any legal proceedings will be held. This clause is particularly important to pay attention to because (1) the website owner wants to be able to control the forum state [don’t make the mistake of copying a Terms of Use, failing to update the state, and getting haled into a faraway court!] and (2) Users need to know how and where they can bring an action against the website. Typically, website will elect for any grievances to be handled in arbitration, which is less laborious than litigation.
Integration – You want to integrate your Terms of Use with your Privacy Policy so that they are both considered together.
Notice – Users need a physical address and e-mail to contact the website regarding the Terms of Use.

Phew, Terms of Use certainly are lengthy! Like mentioned above, this was just an (extremely) high level overview of Terms of Use terminology and clauses. A complete Terms of Use has a more clauses and many more subtleties that need to be addressed according to the website’s specific needs.