The Top 5 Terms & Conditions Legal Considerations
Terms and conditions are ubiquitous and are present on almost every website and app that we use. Whether it is our online banking or purchases made via online marketplaces, such as Amazon.com, terms and conditions are present. Terms are so omnipresent that there are websites that monitor their contents and changes, such as Clickwrapped.com as well as “Terms of Service, Didn’t Read.” There was even a popular documentary called “Terms and Conditions May Apply“ that explored the nuances and dynamics of online terms. While such terms are everywhere, as terms and conditions lawyers who assist clients with protecting their businesses via robust terms, we get a range of questions. Here we will cover the top 5 terms and conditions, legal considerations, and some ancillary clarifying points.
What is the purpose of a Terms & Conditions, and what should they include?
At a basic level, website or app terms and conditions are legal agreements that govern the contractual relationship between the provider of a product or service and a user. Put another way, the terms and conditions “set the rules” and aim to form a legally binding agreement. The terms clarify the rights and responsibilities governing the relationship between a particular website’s owner and its users. The terms form a protective barrier since clarity goes a long way in avoiding disputes. Further, in the event a dispute arises, the terms and conditions are leveraged to ensure that it is clear how such disputes are resolved. For example, the terms might include a clause requiring disputes to be arbitrated versus traditional litigation via the courts.
Related to the purpose of terms, a common question concerns what the terms & conditions should include. There is no simple answer that is a “one size fits all.” After all, the proper clauses to include in the terms will depend on the nature of the website or application in question. For example, an eCommerce store will have clauses that differ in some respects from an online gaming offering. That said, there are certain clause types that will generally be present throughout all properly drafted terms and conditions. Some of the most common clauses seen include those relating to the following:
- Acceptable use of the website or app.
- Intellectual property rights such as trademark ownership and copyright ownership of content, including submitted content, and copyright takedown procedures.
- Payment, refund, shipping, and return policies for eCommerce websites and apps.
- Account creation and termination procedures.
- Dispute resolution clauses, including choice of law, venture, and potential arbitration clauses.
- A variety of disclaimers, indemnification provisions, and limitations of liability.
- Notice procedures in the event either party has to be notified of something, such as a dispute.
- The process for when the terms & conditions are changed.
The listed clauses are only some of the more common ones and, as stated, will vary depending on the nature of the website or app as well as the comprehensiveness of the drafter. Further, and especially for those offerings operating in numerous jurisdictions around the globe, there are often jurisdictional specific terms to account for varied legal and related compliance considerations that differ.
Further, in some jurisdictions, there are legally mandated disclosures for certain kinds of businesses, making some form of terms and conditions potentially a legal compliance requirement. That said, even without a legal mandate, the most straightforward kind of business, such as a startup e-commerce store, can benefit from robust website terms and conditions.
Why are Terms & Conditions sometimes referred to as Terms of Service or Terms of Use, among other names?
Depending on the scenario, there are different names for online agreements that aim to create legally binding agreements between a website or application provider and its users. For example, terms and conditions may, at times, depending on the specifics, be referred to as Terms of Service or Terms of Use.
Should a lawyer draft a Terms & Conditions, or will an online generated terms suffice?
While a lawyer is generally not legally required to draft terms and conditions, having a lawyer familiar with the practice area of online terms and conditions is, in many ways, the most protective in minimizing risk and maximizing legal protection. Alternatives such as online generated terms and conditions or copying terms from others each bring with them their own risks. For example, on an online template, terms and conditions may have the wrong clauses or be overly broad, resulting in unnecessary legal risk. Much of the decision about whether to invest in a lawyer will depend on the nature of the offering and the corresponding risk. Further, there could be value in having a lawyer review a generated terms and conditions template for issues as opposed to conducting a draft, which inevitably costs more money.
How should users accept Terms & Conditions?
As is often the case when it comes to legal matters, the exact requirements for how terms and conditions should be shown and agreed to by users are not black and white. One thing is clear from the many court cases that have explored this issue. There are more protective ways of ensuring binding terms and conditions between users and the provider of a website or app and methods that are lesser. For example, having users affirmatively have to read the terms and then check a box that is above the button proceeding to the next step, whether for the creation of an account or placing an order, will be more robust in showing an agreement and by extension, protective. On the other end of the spectrum and not advisable is where a term is implied in the footer of a website or app and requires no affirmative consent. Courts generally frown upon this practice, and many have deemed such architecture to not rise to the requisite level of a binding agreement. These two differing approaches are sometimes also referred to as “clickwrap,” which requires users to provide affirmative assent, versus “browsewrap,” where there is no affirmative agreement and rather relies on assumed or implied consent. Additional considerations regarding acceptance pertain to recordkeeping of user acceptance.
What is the relationship between a Terms & Conditions and a Privacy Policy?
While often placed near each other, the terms and conditions and privacy policies are generally separate agreements. Whereas terms & conditions are more arbitrary when it comes to the kinds of clauses that can be included, privacy policies have their own set of legal considerations and focus on including the required contents as set out in a variety of comprehensive privacy laws that are currently incredibly dynamic with new laws being passed regularly. As a privacy policy lawyer, and in connection with working on terms and conditions, we help ensure that there are no contradictions between the two, which is a risk if the documents are not drafted and reviewed in concert.
