What Is a Terms of Use?

A terms of use is an agreement that a user must agree to and abide by in order to use a website or service. Terms of use (TOU) can go by many other names, including terms of service (TOS) and terms and conditions. Terms of use are often seen on e-commerce websites and social media websites, but it is not limited to those types of websites and should be used with any website that stores personal information of any kind. A terms of use that is legitimate is a legally binding agreement and is also subject to change, which should be noted in the disclaimer. Websites should always have a terms of use regarding user activity, accounts, products, and technology.

Different Types of Terms of Use Agreements

There are two different types of website agreements: browsewrap and clickwrap. These two can be different and will directly impact the application of a website's terms of use. It is important to know the difference between the two so you can make the most educated decision for your website.

Reasons to Have a Terms of Use

There are five key reasons why you need to have a terms of use agreement on your business's website. Knowing how it can protect you can help you better determine if it is the right option for you. These are the five main reasons businesses decide to develop terms of use for their websites:

• You can mitigate liability for your website. When things go wrong, people want to find someone to blame. If you do not use disclaimer warranties on your website, then the blame could easily be put on you. If you do have a disclaimer warranty on your website, then they cannot blame you if something goes wrong. An example of this happening would be if one of your users' devices became infected with malware. Without the disclaimer, they could say it was caused by your website. Another example would be if your website was down for a specific period of time; your users may try to sue you if they needed your website to conduct their business. A disclaimer will protect you from these actions so you do not have to worry about them or deal with them and waste precious time.

• You can define the permitted conduct for your website. In the terms of use, you can detail what users are and are not allowed to do on your website. It will define how they can use your website and the scope of the license that any of your users have in terms of your content. Depending on the nature of your website, you may even want to include terms on what users can upload or submit to your website. This makes sense for websites that allow users to post comments on content and blog posts, and especially if they are allowed to upload media files. Anything that ends up on your website is a direct reflection of your brand, so it makes sense to determine what is and is not acceptable. Also, if you allow people to use your content elsewhere, your brand will be showcased by your users and you want to make sure your brand is reflected in a positive manner.

• Set up an indemnification process for your website. As much as you may want to, you cannot always control what your users do on your website. However, you can protect yourself against their actions in case they violate someone else's rights. For example, if one of your users decided to upload a file that violates the copyright of someone else and your website gets sued for it, you can make the user pay for all of the legal costs associated with it. While you will still need to take care of the copyright issue and make sure all legal action is taken, you will not be left with the bill that comes with it.

• Implement limitation or exclusion of liability. A strong terms of use agreement is a great line of defense, but there are some cases that get around the provisions you have created. That is why it is important to use your terms of use as a way to also limit the amount of damage your website will incur in the process. If someone does end up taking you to court and they have found a way around some of your provisions, this will allow you to limit the amount of money they can get from you during the process.

• Incorporate an arbitration clause. Whether the dispute is between you and a user or between two of your users, your terms of use can outline how to resolve those disputes so things do not end up in court. In your terms of use, you can require your users to handle their disputes in specific ways. This can prevent the situation from ending up in court in a place that is not close to your headquarters. While this is not a fool-proof method, you can also require that they use mediation so you can save money on court costs, or you can require that all court actions take place in your hometown