Terms of Use Agreements for Web Sites

You need to post notices and policies on your Web site that govern the use of materials, services, and goods from the site.

Web sites should typically include a Terms of Use Agreement that is intended to act as a contract between the Web site owner and the viewers/customers of

the site. The contract needs to be carefully worded to protect the company from liability and address the key terms and conditions for the provision of information, goods, or services. The contract should be conspicuously displayed and available. Ideally, each page of the site or key portions of the site should state 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 contract.

The general expectation is that such online agreements are enforceable.

Key Provisions of Terms of Use Agreements

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, re-use, 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. You generally want to make disclaimers, with notice that you are 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 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. Thus, the customer gives implied assent to the agreement by using the site.

Click here to view a sample Terms of Use Agreement.

Additional Provisions for the Sales of Services or Goods

If the site will be selling services or goods, the following additional provisions may be appropriate:

• Services or Goods. The contract should include a clearly worded description of the goods or services that the company is 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. It is usually desirable to 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 state your refund and return policy, as it is 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.

This can all be done as part of the Terms of Use Agreement or as a separate online contract where users "click" on phrases such as "accept"/"agree" or "decline"/"don't agree", which is then deemed to be the acceptance or declination of the terms.

Click here to view a sample online contract for use in connection with the sale of goods from a Web site.