What is a website "Terms of Use"?

Apr 19, 2015 4:48:21 PM

What is a website“Terms of Use”?

Terms of Use are legal terms to which a website user must agree prior to the use of the service provided by a website. Such agreement is used to define the rights of the user and the website owner, protect the interest of the website owner, limit the parties’ legal obligations and indemnify the website owner. Suffice it to say, a good website terms of use acts as the website owner’s insurance against lawsuits.

How can website Terms of Use be legally binding?

Although the contents of a terms of use can affect its enforceabilty, consistently it boils down to one thing: proper notice. With the ruckus arising from the enforceability of website legal agreements, it is important for you to ensure that the users have a chance to read and review your site’s Terms of Use. A user’s consent may be given via a browsewrap agreement which is usually in the form of a hyperlink found at the bottom of a site(which is NOT ideal and may remain unnoticed even after the user’s purchase of the service or other use of the website), or via a clickwrap agreement which garners a user’s consent by checking a box, clicking a button, or some other affirmative action.

Significant Provisions to Include in a website Terms of Use.

Here are some of the significant clauses that should be included in any website Terms of Use:

  • Forum of Selection. This provision specifies that a dispute arising from the contract shall only be resolved in a particular court and often discourages the user to file a lawsuit due to the location of the court. It makes him think if it’s really worth the trouble.
  • Acceptable Use. This lays down the restrictions on how the website’s service may be used by the user. Violation of this clause usually results to a breach of contract.
  • Arbitration. This is an agreement between the parties that in the event of a dispute, the decision/s of an arbitrator/s shall be binding and conclusive.
  • Limitations of Liability. This provision limits the liabilities of a website owner in case there’s a defect in the product or service purchased by the user or if a certain obligation or requirement is not met by the same owner.
  • Default. This clause provides corresponding penalties in the event a party (usually the user) fails to observe its monetary and non-monetary obligations under the contract.
  • Indemnification. This refers to a part of the agreement wherein a party pays for the losses incurred by the other party.

 

Brian Powers

Written by Brian Powers

PactSafe CEO & Founder