Does my startup need a terms of service?

25 May 2022

This post originally appeared on Kader Law’s blog.

We’ve all received those emails in our inbox – “We’ve updated our terms of service!”. Why do the biggest companies in the world repeatly spam us and make us accept their terms of service? While you are not legally required to have a terms of service agreement, the purpose of these terms is to let your users know how to use your website, protect your intellectual property, and ultimately limit your liability – just in case. That’s why these companies and their legal teams take their terms of service very seriously. If you are a Software as a Service (SaaS), eCommerce website, or a service provider – you should take that into consideration and have website terms published and easily accessible.

And while we’ve all heard the jargon ‘Terms of Service’ before, few of us actually read through them or understand what it all means. As a startup founder responsible for how your product is used, it’s up to you to understand and assess your risk tolerance for how others might use your content & products (sometimes for purposes that were not intended). Below is a introduction to commonly used terms in service provisions and what they mean. You should digest them and see if they are applicable to your website or product and if it’s time to do anything about them.

  1. Acceptance of Terms of Use – This disclaimer essentially lets the user of your website know that by accepting these terms & conditions and using your website, they have entered into an agreement with you to follow the Terms of Use.
  2. Changes – This is why you get those emails in your inbox. This lets your users know that you retain the right and ability to update and change the Terms of Use as you see fit from time to time.
  3. Accessing the Website and Account Security – This provision makes the user responsible for having access to the website, protecting their username and password credentials, and ensuring that anyone that uses the website through their account knows, understands, and accepts the terms of use.
  4. Intellectual Property Rights/Trademarks – This is a provision protecting your intellectual property on the website – and letting the user know that they are not to use your intellectual property or trademarked material for commercial use without permission.
  5. Prohibited Uses – This outlines what the prohibited uses of your website are – ensuring that your users follow federal, state, and local laws and do not use your website to conduct illegal businesses.
  6. User Contribution Standards – If your website allows user contributions, this provision lets the user know that you have standards they must adhere to.
  7. Monitoring and Enforcement; Termination – As an add-on to the user contribution standards, this gives you the right to monitor, enforce, delete user generated content or terminate a users account.
  8. Content Standards – As an add-on to the user contribution standards, this provision actually lays out the rules you expect your users to follow – including avoiding defamatory language, conduct illegal activities, violate legal rights, etc.
  9. Copyright Infringement – If you have a separate copyright policy, you can use this provision to link to that.
  10. Reliance on Information – This provision lets users know that the information you provide on your website are solely for general purposes, and that you do not warrant accuracy, completeness, or usefulness.
  11. Changes to Website – This provision lets users know that you can update the content of your website if and when you see fit at your own discretion.
  12. Links from Website – This provision lets users know that they may link your website to their social media, and other networks – under certain conditions.
  13. Disclaimer on Warranties – This provision is important, and lets the user know that you are disclaiming any warranties from damage your website might cause to the user – and that the use of your website is at the users own risk.
  14. Limitation on Liabilities – This provision limits your liability in case the user suffers damages due to use of your website.
  15. Indemnification – This provision lets the user know that by using your website, they are indemnifying you for any issues that rise out of a violation of these terms of use.
  16. Miscellaneous Provisions – Are standard in every contract, and include:
    • Governing Law
    • Arbitration or Court – How will disputes be handled – in arbitration, or in court?
    • Limitations on Time to File Claim
    • Waiver and Severability
    • Entire Agreement
  17. Data Privacy – This provision can link to a separate privacy policy, and should lay out how you approach data privacy of users, what their rights are, and how you adhere to standards such as the Health Insurance Portability and Accountability Act (HIPAA), California Consumer Privacy Act (CCPA), EU General Data Protection Regulation (GDPR), and the like.
  18. Your Comments and Concerns – This provision gives users a clear way to reach out to you in case they have comments or concerns about your website.

Get Help With Your Terms Of Service

This post is just an overview of provisions your website terms of use should have. There are more nuances and specifics around regulations and contracts that you should understand if you plan on doing business online. I am a part of Gust Launch’s vetted startup law partners network and happy to personally work with your company to help craft the language your business needs.

About Kader Law

Kader Law helps technology companies with their day to day legal needs – including commercial transactions, contracts, product counsel, data privacy compliance, cybersecurity, policies, intellectual property, negotiations, guidance around Blockchain implementation, and government contracts. Shahed Kader is licensed to practice law in Washington DC and Maryland.

Gust Launch can help connect you with a vetted legal partner to help you make the best decisions for your company.

This article is intended for informational purposes only, and doesn't constitute tax, accounting, or legal advice. Everyone's situation is different! For advice in light of your unique circumstances, consult a tax advisor, accountant, or lawyer.