A Terms of Use agreement or Terms and Conditions, as it is sometimes called, is an important part of an eCommerce website.

What Are “Terms of Use”?

A Terms of Use agreement is important for limiting the potential liability of website owners and operators, protecting intellectual property rights, and establishing other contractual terms or policies relating to the use of the site. In addition, a Terms of Use agreement can also serve as an important marketing tool by setting the tone and providing information about the substance of the website.

What is the Purpose of Web Terms of Use?

The basic objective of a Terms of Use agreement is to form a binding contract with the user that licenses access to the website and use of intellectual property found there, as well as limit the website owner’s liability. Enforceability of a Terms of Use agreement is based on the theory that a contract is formed between the party offering the website and the user of the website. However, the enforceability of this contract depends largely on how the Terms of Use agreement presented to the website user.

What Should Web Terms of Use Cover?

Terms of Use agreements should be specifically catered to each individual eCommerce business. The types of goods or services offered, the perceived audience of the business, and the type of business are all factors that can largely affect the contents of a Terms of Use agreement. For example, websites that collect personal information from children do not want to run afoul of the Children’s Online Privacy Protection Act. Websites in heavily regulated industries – such as securities or insurance brokers – may need to require visitors to print and manually sign certain documents. Other Terms of Use agreements may wish to address unsolicited idea submissions or simply reflect the particular business objectives of the site.

Typically, a Terms of Use agreement should also include common provisions found in most contracts, including: (1) the governing law and jurisdiction for disputes; (2) integration or merger clause; (3) survival language; and (4) the effective date of the agreement.

What Else Do I Need to Know About Web Terms of Use?

eCommerce businesses should regularly revise the Terms of Use agreement to reflect changes on their website. However, revisions require some acknowledgement from the users that they have been alerted or otherwise been made aware of the changes and updates to the Terms of Use.