8 Legal Terms Small Businesses Should Know

By Alari Adams on April 18th, 2013 / Comments

“I have read and agree to the Terms and Conditions.”

This has to be one of the biggest lies told daily on the internet (unless you are engaging in catfish-ing).  Despite a website user’s nonchalant attitude towards the Terms, it is imperative, and required by some states, for a website to compose and post “Terms and Conditions” aka “Terms of Use” aka “Terms of Service.”  Whatever name you decide, they all serve the same purpose – to create a legally binding contract between you and your user.

Fortunately, the language contained within this contract is based on your rules – there is no negotiation required between you and the user.  Therefore, a respective user can take them or leave them.  But if they take them, you must ensure that your Terms capture the requisite protection needed for you and your site.

The following are some subjects you may want to address and include in your Terms:

Acceptable Conduct – This clause will define how users must conduct themselves while using your site.  For example, if comments are permitted on your site (e.g. a blog) then you need to may state what is or is not permitted such as no profanity, harassment, or intimidating behavior towards other users.

Jurisdiction –This clause identifies which state and county will have jurisdiction for any filed lawsuits.  Typically you will opt for the state where your primary office is located.  Alternatively, you can choose to have disputes resolved through arbitration or mediation.

Disclaimer and Liability Limitation – This clause offers and provides protection to you because you are disclaiming any responsibility for the accuracy of any information contained on the site.  Additionally, it is important to protect yourself by forfeiting any liability from an individual’s use of your site (e.g. if they receive a computer virus via a download).

Intellectual Property – This clause identifies proper ownership and use of your intellectual property such as making it clear that your logo, name, and content cannot be used or produced without your permission.  Also you should include information about where to report any possible infringement.

Endorsement – This clause will comply with the Federal Trade Commission (FTC) requirement of disclosing to users whether or not you are receiving a commission (money or a free product/service) based upon your endorsement of a product (e.g. affiliate marketing).  It is also suggested that you add a disclosure statement at the bottom of the applicable post or advertisement.

Indemnity Clause – This clause commits your user to compensate you for any fees and costs that may arise from defending a lawsuit based on their conduct on your site.  For example, if a user impermissibly uploads content that is lawfully owned by a third party, that party may decide to sue you for infringement.  As a result, the user must reimburse you for any incurred fees associated with your defense of the lawsuit.

Licenses – This clause makes your user aware that you have a license to freely use any feedback (comments, questions, documents, etc.) they provide to your website.  For example, any comments or suggestions by a user can be used for marketing or product development without you compensating or apprising the user.

Privacy Policy – This clause identifies the manner in which the data and information submitted by a user is stored and utilized.  Typically a hyperlink is provided within this clause to direct the user to a more thorough and detailed explanation outlining your site’s privacy practices.

While this list is nowhere near exhaustive, it does provide you with a brief overview of what your clear and concise Terms may need.  Therefore, it is critical to have Terms drafted that specifically address your site’s function and purpose without merely copying the Terms of a comparable website or implementing generic Terms.

Ultimately, failing to tailor your Terms in a manner that provides you with the most legal protection may result in you being on the losing end of a lawsuit against the one person who actually clicked and read your Terms and Conditions.

The information contained in this article is for general purposes only and does not constitute legal advice nor does it create an attorney-client relationship.

Photo via Slashgear.

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About the Author

Alari Adams

Alari K. Adams enjoys assisting individuals who are brave enough to live out their dreams. She is founder of ASquared Legal Group, PLC which provides effective legal counsel to entrepreneurs regarding their emerging small businesses or startup. Follow her on Twitter @ASquaredlegal.