Does Your Startup’s Website Have Terms of Service? It Should…

If your startup’s business is focused largely around a website, then it should almost certainly have a terms of service that all users must agree to. A good set of terms of service will help protect your fledgling company from costly litigation or from liabilities arising from unforeseen circumstances or unauthorized or unintended use of your website.

Your website’s terms of service can protect your from onerous litigation through choice of law, choice of forum, arbitration, and waiver of class action clauses. Clauses like these can force users who wish to sue you to do so in your jurisdiction, and can bar them from bringing costly class action suits.

Moreover, terms of service can also allow you to disclaim or shift liability or obtain indemnity in the event that your site is not used in ways you intended — however, you should also include some sort of statement of what the intended use or uses of the website are to be. For example, you can disclaim liability if users are damaged by things that are out of your control (such as if your site arranges nightclub VIP experiences and a user/client is injured in a fight at that club). Or you can shift liability to the user if the user themselves misuses the site and is thereby damaged, or if the user uses the site to damage a third party. Of particular note in this area is if you site involves users uploading outside content to your site, you will want the terms of service to shift liability to the user or require the user to indemnify you if they upload IP-infringing content (additionally, the terms should also give the website a license to use any properly-owned user-uploaded content — you don’t want a user claiming your site is using their content in a way they did not intend or authorize!).

Terms of service are a binding contract between the website owner and the user. However, in order to ensure that a court enforces your terms in the event of a lawsuit, you should take some extra steps to demonstrate that the user really did assent to the terms. Although merely accessing the site might be enough to establish that assent, you really don’t want to risk hanging your company’s hat on that. Before a user is allowed to access the features of your site, you should put the terms of service in front of the user for them to read (don’t merely provide a link).

A good terms of service setup would be to have the terms be a separate page or step in the user signup process, with the terms on the page for the user to read. The user should have to check or highlight a box indicating their assent to the terms before they are allowed to continue on with the signup process — one interesting setup I’ve seen is putting the terms in a frame within the page, and not letting a user check the assent box until they’ve scrolled down to the bottom of the frame (so that you can presume the user has read the terms, whether or not they actually have).

Terms of service are critical for any startup whose business relies on their website. You can either have an attorney draft up custom terms for you, or if you feel up to the task there are resources such as Docracy that have model terms of services tailored to a number of industries.