Terms of Use (also known as Terms of Service) play a pivotal role in digital business practices. These online agreements are intended to form a contractual relationship between a website or app and its user. Issues surrounding the enforceability of such agreements have been the subject of many legal articles, including this one written by my colleague. In addition to advising clients on enforceability, another question I am often asked is whether Terms of Use are always necessary, even for small, very basic public websites or apps (and if so, why).

The answer is YES. Every website or app should have legal terms and conditions governing its use. Why? Because these online agreements provide important legal protections for your business. Not convinced? Here are 8 key reasons why you need Terms of Use for your business:

  • Protect your intellectual property so others cannot copy software, content or data from your website/app without your permission.
  • Prohibit users from taking such adverse action as (a) reselling your content or services without your permission; (b) posting or transmitting offensive or illegal content or viruses; or (c) filing a class action lawsuit against you
  • Secure your rights to (a) to use any ideas or content submitted by users; (b) use user data in legally permissible ways (such as, just to name a few, for aggregated insights, retargeting, to create personalized ads and content, etc.); (c) cut off users who violate your rules; or simply to (d) charge credit cards on file for paid services
  • Disclaim your liability for (a) third party products and services featured on your site/app or linked to or (b) users who may allege that their poor decisions are the result of your content or data
  • Cap your liability in the event you are sued by any users, so you have a fixed maximum exposure
  • Reserve the right to recoup monetary damages from users who harm you or your business; and to specify which court or jurisdiction will hear lawsuits involving your business
  • Leverage any applicable “safe-harbors” for your industry (for example, publishers are generally not liable for things other people say on their site or app)
  • Discourage frivolous lawsuits by having clear terms and conditions which apply to your users

Given the importance of online agreements, a business should never just “copy and paste” another company’s Terms of Use. Aside from the potential copyright violation created by this practice, terms and conditions should be tailored to each website or app. Although 80% of these online terms will look very similar to one another, the last 20% are likely where customized Terms of Use matter most. Therefore any business with an online footprint, even just a simple website or app, should consider taking steps to prepare a Terms of Use.