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Legal Guide

Terms of Service: What Entrepreneurs Should Know

When you launch a website or app you are probably not thinking about legal issues, but you should. Depending on what your website or app does, you may need legal terms to protect you.


What are Terms of Service

Terms of Service (sometimes called Terms of Use or Terms and Conditions) are legal terms that your users accept and agree to when they use your website or app. They create a set of rules that you can enforce against your users and can include things like ownership of your intellectual property, rights to terminate a user’s access to your site, limitations on liability if your site goes down, prohibitions on people scraping your service with bots, and requirements that users use your local court if they want to sue you. (You might also include your DMCA/Copyright Policy in your terms, or you might keep that separate.)


Why You Might Need Terms of Service

Most states do not require you to have Terms of Service. However, some states do require you to have a Privacy Policy, especially if you are collecting information about your users.

Other than state requirements, here are some reasons your startup’s website or app may need one or both:

  • If you are sharing a lot of content, you can use your terms to prohibit unauthorized use of your content.
  • If you want to prevent bots and automated systems from accessing your service, you can include prohibitions in your terms.
  • If you allow users to create user accounts, then you can create rules for who can create accounts and how you and them can terminate those accounts.
  • If you think you are exposing yourself to liability (like providing free self-help advice), you can use your terms to provide disclaimers and limitations on liability.
  • If there is any likely chance of someone suing you, you can use your terms to dictate which state’s law applies and what court they must sue you in. (You can also include an arbitration clause.)

And perhaps most importantly, if your startup is (a) collecting payments through your website or app; and/or (b) allowing people to upload and share content to your website or app, it is very critical that you have both Terms of Service and a Privacy Policy.

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What to Include in Your Terms of Service

Here are some things you might consider including in your terms:

  • A limited license to use your website or app.
  • A prohibition on uses you don’t want on your site, such as bots, automated scraping, etc.
  • An age limit (it is common for websites to prohibit children under 13 to avoid issues with COPPA).
  • Requirements and rules for creating, managing, and deleting user accounts.
  • A statement that you (or your licensors) own the content and related intellectual property on your website.
  • If your users can upload content, then terms regarding what rights they retain in that content.
    • And if that content will be visible to other users on your website, a DMCA Policy. (We’ll cover that in a future post.)
  • If you charge fees to use your service, then payment, refund, and cancellation terms.
  • If you offer APIs, then API-specific terms (or you can create a separate agreement for API use).
  • Disclaimers and limitations on your liability (for things like the website or app going down, people misusing someone else’s data that that other person shared publicly on the site, etc.).
  • An agreement to arbitrate disputes rather than suing in courts.
  • Various miscellaneous legal terms like assignability, governing law, etc.
  • And last but definitely not least, a section detailing how you can amend the Terms of Use (in most cases, you will retain the right to unilaterally amend the terms, provided you send users advance notice).


Smart Next Step for Your Business

There are a lot of ways to get legal terms for your your startup or small business. You can write your own, use language from other websites (but don’t commit copyright infringement), use an online terms generator, or hire a startup lawyer to help you. Each has its own advantages and disadvantages, but I obviously think engaging a startup lawyer is the safest way to get your legal terms.

(This article is general in nature and is not legal advice.)

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