Terms of service for a website set the rules that visitors and clients must follow while using services, establish property rights, and limit the liabilities that fall on business, which may help avoid or resolve potential legal disputes.
The Terms of service may have other names, such as Terms of use, Terms and conditions or User agreement. Regardless of the name, the purpose of the document is to inform visitors what they can and can't do on the website and establish their liability for violating rules.
What clauses must be included to make Terms of use for websites effective?
The set of clauses will be different, depending on the types of websites, so we prepare the guide on Terms of service creation based on our previous cases from different IT business fields. You can find not only legal advice in this article, but examples of clauses to implement them and make your document better at once.
The website purposes
This section must be started with information about an owner of a website to tell visitors who intellectual property rights belong to and who receives income from monetization. Adding this data to Terms of use is necessary to pass tax or bank compliance and prove owner’s rights violations, if any were to take place.
The next step is to explain a website's purpose, more precisely its functionality, how it can be useful and what needs can be satisfied through using it. The description will be unique for every IT product, so let’s take a look for some examples we have drawn up for our clients.
Through reading the description, website visitors may figure out at once what IT product’s functions are and what tasks can be performed.
The methods of monetization and payment
The task of this part in the document is to explain how the owner of the website receives income. For example, we have drawn up the Terms of use for SIA Simata, which is a platform for the analysis, modeling and visualization of technical analysis data in financial markets. SIA Simata’s clients can buy a subscription for a month or a year and get access to financial news, charts, reports, articles, commentaries, investment advice, analysis and market information, newsletters, advanced performance tools written or provided by other sources through a public API connection.
In this aspect it is important to describe what a payment system is connected to a website and is used for transactions. Payment for SIA Simata subscription can be made by:
- non-cash payment through Paddle or Stripe payment systems;
- crypto payment through Coingate.
It is not enough to simply name payment systems. We advise the client to warn website visitors that every acquiring has their Terms of use and Privacy Policy, so you need to leave the links to them to give visitors an opportunity to get acquainted.
One more point is the payment returning conditions, so in the Terms of use must have a clause about the returning process, which is unique for every website. SIA Simata’s document includes a clause warning that a subscription involves access to all content on the platform, such as reports, tools, tips, documentation, and other items. This content constitutes a "digital good" and is non-refundable under the EU law, but if SIA Simata’s clients suppose payment was deducted by mistake, they must contact SIA Simata within 48 hours of such charge. Let’s compare this example with Youwex returning policy. This website for freelancers set 2 conditions when payment returning is possible:
- The session was not held due to the fault of the specialist, who must provide some services on the Youwex platform, when providing evidence of a disrupted or not held online session, namely: screen recording, screenshots, and more.
- The session did not take place due to technical problems on the platform.
These two options can be used only after providing evidence of specialist fault or technical problems, namely: contacting technical support to fix problems, screen recording, screenshot and other facts.
There are some more points that must be set by Terms of use:
- Taxes, for instance VAT. SIA Simata warns that the subscription price includes applicable VAT taxes depending on the clients’ jurisdiction.
- Payment system commission. For example, Youwex set that the cost of the services hosted on the platform includes payment service fee, so the client pays it.
The age restrictions
Every website must designate the permissible age for its users, which is defined depending on types of services, content, target audience, and targeting territory. For example, Youwex can be used by those over the age of 18. Anyone younger — exclusively with the permission of a parent or guardian.
The rules for visitors and clients
Thanks to the Terms of use, we can regulate the use of a website and specifically set some restrictions for using a website (such as prohibition of posting abusive material, using robots or scrapping devices to copy content, and using the website in an illegal manner).
You can find the list of restrictions we advice to add to your document, concerning prohibition to:
- Use any devices, programs, procedures, algorithms and methods, automatic devices to access, acquire, copy or monitor the content of a website.
- Sell and transfer login and password to access a website to third parties.
- Copy, reproduce, modify, distribute or present to the public any information contained on a website.
- Use services in any manner that could damage, disable, overburden, or otherwise impair a website.
- Create a similar or competitive website and others.
Some clauses we add to the document are common for different websites, but some of them are more specific and suitable for individual projects. Let’s take a look at the Youwex case. This freelance service forbids to indicate in a user’s profile addresses, phone numbers, e-mail addresses, passport or registration data and other information through which a user can be contacted outside the platform. This is because Youwex charges a commission on transactions between users and is not interested in their interaction outside the platform. Therefore, the platform can get acquainted with the history of private messages and at any time delete a private message that does not meet the requirements.
In order to effectively deal with violations of the rules, the Terms of use must include the clause about the right to block users’ accounts, if they have breached terms. It is important to write the list of possible violations which will be the cause for account blocking. For example, if SIA Simata supposes that a user's account has been involved in fraud, crime or violation of laws or regulations, or has been illegally accessed, the user’s account or any privileges may be suspended or frozen.
The disclaimers
Disclaimers limit the website’s owner liability for any loss, damage or claims and expenses that clients can suffer whilst using your website. The Terms of use can help protect your business against baseless claims.
You can limit your liability in case:
- Technical errors take place on a website.
- A website is inaccessible.
- The speed of loading and working of a website is insufficient if the user's Internet connection is unstable.
- A website isn’t systematically updated.
- A user has suffered losses as a result of using the website’s services.
Usually, websites additionally need unique disclaimers to protect their specific interests. The SIA Simata case is a relevant example to explain this idea. This platform provides clients analytical information about security and currency markets, but nothing contained on the website constitutes a recommendation of any particular investment. It was important for SIA Simata to limit liability for the results of applying recommendations from the platform, and warn clients that the company does not provide investment guarantees.
The intellectual property protection
Firstly, we identify all intellectual property objects which are protected. This list may include software code, design, technologies, trademarks, content, banners, icons, illustrations and images, audio or video and others. Some IT products need to add special objects. For example, SIA Simata needs to protect analytics, reports and other content about financial markets, so the list must be full and precise. Secondly, it is important to warn visitors and clients that coping, republishing, modifying, distributing, and reverse engineering is prohibited. If any violations take place, these clauses will be used as strong evidence in a court of consequences.
Five more legal clauses which are crucial for your document and must be indicated:
- when Terms of use agreement come into force
- how to contact website support team
- how changes are made to the Terms of use
- what law will apply if disputes happen, and where it will be considered.
Often websites collect and process personal data to achieve their business goals, so additionally they need to draw up and publish Privacy Policy.
Where is it better to publish the Terms of use?
Most website owners publish the Terms of use in the footer and think the mission is accomplished, but the consent with the Terms of use must be explicit. Such a requirement is met when a user takes a real action to agree, for example, put a check mark "I agree" or “I accept”, as The Verge has done.
Failure to comply with such a requirement leads to losses. For example, Alan Ross Machinery Corporation failed to comply and lost the case in Illinois District Court. The company sued Machinio Corporation for stealing industrial machinery sales lists from Alan Ross’s website and entering such data on Machinio's website. This action is prohibited and it is written in the Terms of use of Alan Ross’s website. The court rejected the plaintiff's arguments because the website contained a hyperlink to the Terms of use at the bottom of each page, but did not require users to affirmatively agree to the document, for example, by registering or clicking the "I agree" button.
Now you know how to create the Terms of use and guarantee a high level of your business protection. You can use our guide, but don’t forget that every website and business is unique, so it must be taken into consideration when the document is developing.
