Your terms of service can be a critical part of doing business, whether you are operating a complex online application or a brick and mortar store. Terms of service primary create a contract between you and your customers, and dictate the standards of your interaction together or the process if those standards are violated. They provide a structure to the business and also offer some protection against lawsuits and other punitive actions filed against your company.
A great terms of service, however, can provide a useful guide to your customers about the nature of these relationship with your business, which can result in a great level of trust and ultimately manifest into greater sales. Terms of Service documentation should be both user friendly and iron-clad. Below you’ll find five tips for writing (or creating) the best Terms of Service possible for your business. Since your Terms of Service is so vital to your business, you should have a lawyer take the first crack at writing them, reminding them of these practices, and then provide your input.
Avoid Legal Confusion, Make it Readable
If you terms of service are too long and complex, your customers won’t read it or are going to start asking questions (vs purchasing your product) which may require you to consult your business lawyer even more! There’s no reason that Terms of Service documentation can’t be written in plain language that retains all of the same legal power that dense verbiage holds. Plus, if you do use stilted and obscure terminology, you’re going to have to waste time (and space) explaining what all of it means anyway—better to make it easy to understand in the first place.
For a great example of a company doing this well, check out the TOS page on the website of 500px (a competitor to Flickr). On the left-hand side of the page, the terms are laid out in lawyer-speak, while the right-hand side of the page contains easily understandable translations.
Add Examples
Breaking your Terms of Service into sections (which most of us do anyway) and offering plainer-than-plain language simplifications inside each section allows your customers to “get the gist” of what each section means, without reading the whole text. Not only does this make your Terms of Service easy to understand, it provides a visual break so that the document doesn’t look like an excerpt from Wikipedia.
On the other hand, Editorially, the writing/rewriting collaborative website, recommends offering clear examples of what each statement really means as it pertains to your specific business. For example:
“We will store your personal information, but will not share it with any third parties, except as necessary to provide the services offered. For example, we may store your personal information along with your files and data on a third party server such as Amazon Web Services.”
Hallway User Testing is Vital
Hallway testing is the best way to see if something works, and your Terms of Service are no exception. As your staff to review your policy and provide feedback. Ask them to pay special attention to clauses they don’t particularly understand or that sound hostile. These people are the ones on your side and should be the ones who know the most about what your business does. If they can’t understand it, no one will.
Lastly, give your users on opportunity to chime in (such as in a forum or through email communication). The last thing you want your Terms of Service to do is confuse or alienate your customer base. The documentation is supposed to be designed as legal protection for you and them – not as a roadblock to doing business.
Simple Does Not Mean Short
While it may be tempting to keep your Terms of Service short and sweet, you shouldn’t let the size of the document dictate the content. It is, after all, an important and legally binding contract between you and your users. As such, it should contain all of the necessary “Do’s and Don’ts” associated with your business. These may include:
Payment Terms
Consequences for Non-Payment
Ownership Rights (to user info and user-created content, as well as business info and business-created content)
Termination of Services Documentation
Litigation Rights
Although it might sound cost prohibitive to hire a lawyer to write your company’s Terms of Service documents, UpCounsel can help get your statements reviewed by someone with an expert’s eye. Remember, the last thing you want is to find out down the road that you’re not actually covered for some contingency you never even thought of while starting your business!
Include an Arbitration Clause
Increasingly, businesses are avoiding more class action lawsuits and driving down the costs of litigation by included arbitration clauses in their Terms of Services. With arbitration clauses in place, customers with disputes must instead submit to individual arbitration, which is far less expensive and friendlier to businesses than the traditional courtroom.
The most recent Supreme Court decision of American Express Co. v. Italian Colors Restaurant helped to codify this trend by supporting a corporation's use of arbitration clauses to force arbitration in the case of customer disputes. Thus, by plugging in a simple, reasonable arbitration provision into your terms of service, you can increase your chances of avoiding the high costs of the courtroom. The below is an example of such a clause:
“. . . any dispute arising under this Agreement shall be finally settled on an individual basis in accordance with the Comprehensive Arbitration Rules of the Judicial Arbitration and Mediation Service, Inc. (“JAMS”) by three arbitrators appointed in accordance with such Rules. The arbitration shall take place in [City], [State], in the English language and the arbitral decision may be enforced in any court . . .”
