Should I Put a Terms of Use Agreement on My Web Site?

Just like in traditional brick-and-mortar stores, libraries, parking lots, and amusement parks, you need to post notices and policies on your Web site that govern the use of materials, services and goods from the site.

A terms of use agreement acts as a contract between you and the people

who visit your site. A carefully worded agreement can protect your company from liability, and should address the key terms and conditions for the provision of information, goods, or services. The agreement should be conspicuously displayed and available. Ideally, each page of your site (or key portions of it) should have a statement that use of the site or the purchase of goods and services through the site is governed by the contract with a hyperlink to the full agreement.

Important provisions in terms of use agreements include:

Limited right to use. The agreement should identify any limitations on the permitted use of any information made available, together with notices regarding the restrictions on copying, reuse, and distribution of information provided.

Indemnification. The agreement can require the user to indemnify, defend, and hold you and your affiliates harmless from any liability, loss, claim, and expense, including attorney's fees and expenses, related to a user's violation of the agreement or use of the Web site.

Disclaimers. Make any necessary disclaimers, with notice that you're providing the information "as is," with no representations and warranties.

Forum selection. Here, the company states that any dispute or claim that arises must be brought in the city that is the company's principal place of business. This may help you avoid being dragged into litigation in foreign states or territories.

Remedies. The limitation of the remedies available to a disgruntled party (e.g., a waiver of any indirect, consequential, or speculative damages or lost profits) should be featured prominently in the agreement.

Statute of limitations. The agreement could include a shortened statute of limitations in the event of any claim to be brought by an unhappy customer. For example: "Any cause of action by the customer must be instituted within one (1) year after purchase or use or be forever waived and barred."

Acceptance of the agreement. Unlike traditional agreements, there is typically no opportunity to collect the customer's signature before use. Most Web sites provide that the use of the site is governed by a Terms of Use Agreement, with a hyperlink to the agreement.

If you're selling services or goods on your site, you may want to include the following additional provisions:

Services or goods. The contract should include a clearly worded description of the goods or services you're providing.

Payment for goods and payment of applicable taxes. The agreement should state that the customer must pay any charges and any sales or use tax. Be careful what you say about shipping costs — some companies have been sued for misleading customers about their shipping charge.

Limitation of liability. Here you can state that the company will not be liable for anything other than the price of the product or service purchased.

Refund and return policies. You should clearly state your refund and return policy. In fact, it's required by law in certain states. This policy should include arrangements to either mail a full refund or ship substitute goods if more than a certain number of days elapse from the time payment is received.

Copyright by Richard D. Harroch. All Rights Reserved.