In today's digital landscape, public-facing websites are often the primary way businesses, nonprofits, and other organizations connect with their customers and the broader public. For this reason, it is critical that these websites are not only easy to navigate and use, but also clearly explain the rules for access and use. Online Terms of Service (TOS) establish the rules, expectations, and obligations for users, creating a binding agreement between the company and the website user. Working in tandem with TOS is the company's online privacy policy, which explains how the company collects, uses, protects, and discloses personal information and other data.
In this two-part blog series, we take a closer look at both TOS and online privacy policies. Below, we discuss key considerations when adopting and maintaining TOS. In Part Two, OGC Partner, Rick Reed will explore the importance of a well-developed online privacy policy.
Part One: Terms of Service
Browsewrap and Clickwrap
There are two general types of online TOS agreements: browsewrap and clickwrap. Browsewrap TOS are usually accessible via a hyperlink, and the user is typically deemed to accept the terms simply by using the website. Clickwrap TOS, in contrast, require the user to actively agree to the terms (for example, by checking a box) before accessing the site or services. Clickwrap TOS are generally more enforceable in the event of a dispute because they provide clearer evidence of user express consent. However, enforceability also depends on additional factors, such as how clearly the terms are presented and whether they are understandable and unambiguous.
Core Components of Terms of Service
TOS typically include terms found in standard agreements between a company and its users or customers, such as:
- Description of services and products
- User restrictions
- Content ownership
- Limitations of liability
- Disclaimer of warranties
- Indemnification
- Intellectual property rights
- Termination rights
- Governing law and dispute resolution
Because TOS are periodically updated or modified, it is good practice to include a statement to this effect in the TOS and to notify users of any changes — for example, through online notices or email updates.
If your website links to third-party content or other websites, consider including in your TOS an express disclaimer of responsibility for such content or external sites. Similarly, if users can upload content to your site, your TOS could address your rights regarding that content. For example, you may want to state that the company can use user content to improve website functionality or anonymize user data for internal purposes.
Importantly, including overly aggressive provisions can be risky. Courts may find certain provisions unenforceable if they are deemed unconscionable or deprive users of fundamental rights. For instance, broad liability disclaimers or unreasonable caps on damages may not hold up in court.
Waiver of Fundamental Rights
Some states require that contractual waivers of fundamental rights — such as the right to a jury trial, or provisions specifying choice of forum or governing law — must be explicit and unambiguous, with clear evidence of user assent. Companies operating in these states may be better served by using clickwrap agreements that present such waivers conspicuously — for example, in bold or capitalized text. Some courts may also disfavor TOS that unreasonably limit basic user rights, such as clauses that prohibit users from ever making negative comments about a company.
Preparing Terms of Service
Before drafting TOS, it is important to understand which laws and regulations apply to the company's business and website operations — including relevant consumer protection laws. For example, companies whose online business gives them access to patient-identifiable health information must ensure their TOS are consistent with key privacy legislation, such as the Health Insurance Portability and Accountability Act of 1996 (HIPAA).
When drafting TOS, it is helpful to include terms that are clear, concise, and user-friendly, while providing enough detail to explain the rules and expectations for using the company's website and services, and for complying with applicable laws and regulations. Companies may also want to consider periodically review and update their TOS to reflect changes in the law or their business operations.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
