Why You Need a Website Terms and Conditions Policy to Protect Yourself

James Chiodo, Certified Information Privacy Professional CIPP/US

You may have noticed that many times you are asked to “click” to agree to the terms and conditions before you enter a website or do business on the site. This simple click is extremely important to both the business owner and the consumer.

The Internet has flourished in the past 20 years, becoming somewhat of a wild west in terms of exchanging information, copyright infringement, and potential liability. Causes of action filed by disgruntled Internet users run the gamut from violations of the user’s right to privacy, fraud, misrepresentation, trade libel, defamation, and more.

As a business owner, how do your protect yourself in this environment? If you have a presence on the Internet, one key way to minimize your liability exposure is to have an attorney-drafted website terms and conditions policy on your site.

A terms and conditions policy is, in essence, a legal contract between your business and your customer. In fact, courts recognize a website terms and conditions policy as a legally binding contract that can greatly reduce your liability if you are ever sued.

A terms and conditions policy sets out the terms of your relationship with your website’s members and visitors. It should explain what your business is, what you are responsible for, and, more importantly, what you are not responsible for. This last detail is particularly important if the information on your site is ever misused. The terms and conditions policy is meant to protect not only you, but also your customer.

Within a website’s terms and conditions policy, you can generate a significant amount of control over what occurs on your website and limit your responsibility and liability by using specific website disclaimers and guidelines.

Here are a few of the topics covered:

  • Content and financial disclaimer
  • Disclaimers for sponsors and advertisers
  • Linking in and out of the website
  • Intellectual ownership
  • Use of website information
  • Errors and changes
  • Limitation of company liability
  • Conduct of members
  • Relationship to members and visitors
  • Refund policy
  • Arbitration
  • And more

An important advantage of a website’s terms-and-conditions policy is that it controls disagreement resolution. A predominant concern with Internet business is that a possible lawsuit might arise in the United States or anywhere in the world. Having to defend a lawsuit that was filed in another state or country is time consuming and very costly.

Courts have ruled that parties to an agreement are able to agree in advance where the disagreement will be resolved. This concept is called a “choice of forum” clause and is very important to include in your website’s terms and conditions policy.

Should a disagreement arise, you can also stipulate that it be resolved through arbitration rather than in court. Arbitration is usually preferable to a fight in court because it is faster and less expensive than trial.

The courts have recognized a terms and conditions policy as a binding contract between the parties. In Ticketmaster Corp. vs. Tickets.Com, Inc. 2003 U.S. Dist. Lexus 6483 (C.P. CA, March 7, 2003), the Court held that a binding agreement can be formed by the use of a website provided that the user has knowledge of the site’s terms and conditions.

Why You Need a Terms and Conditions for Your Website

Having a terms and conditions policy on your site not only makes good business sense; it can also ultimately save you money and headaches. Why leave yourself open to a potentially disgruntled customer? An attorney-drafted terms and conditions policy gives you an important level of protection that all businesses operating on the Internet should have.

Our attorney-drafted website terms and conditions template includes important provisions that are sold separately by other companies, such as financial and legal disclaimers, Digital Millennium Copyright Act (DMCA) compliance, and refund policies.


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