WEBSITE TERMS OF USE – MANDATORY FOR EVERY WEBSITE?

13
June 2022

You have noticed that many websites contain Terms of Use, but you’re not sure if you really need another webpage with a bunch of tedious text that probably “no one ever reads”? What is the purpose of Terms of Use, and do you need them if your website is just a presentation website?

Are these Terms of Use binding? What are click-wrap and browser-wrap agreements? What could happen if you copy the Terms of Use from someone else’s website? And, if your e-commerce website already has General Terms of Service, do you need the Terms of Use as well?

These are amongst the most common issues we have encountered in practice, and through this text, we will try to resolve all your doubts.

What are Website Terms of Use?

Terms of Use or Terms and Conditions are rules that your users must accept if they wish to continue using your website. However, this term is often used not only for the use of the website itself but also for the use of services provided through the website (for example, in Software-as-a-Service agreements with users) or to purchase products (for example, on e-commerce stores). For the purpose of this text, the expression Terms of Use will refer to the terms of use of a website only, regardless of whether it is a presentation site or an application through which the service or sale of goods is provided.

So, the Terms of Use represent a certain kind of agreement between you and your users.

When we say “agreement”, probably the first thing that comes to your mind is a piece of paper that both sides sign to formalize their agreement and the terms of their cooperation. However, even though they are not in a paper form and there is no signing, the Terms of Use represent an agreement that regulates the rights and obligations of the contracting parties – you and your users. In this specific category of the agreements, the Cloud Agreements fall as well, and we have seen their remarkable expansion during the last decade.

To ensure that each user follows your rules, it is necessary to define the Terms of Use of the website clearly and transparently, and finally, with proper implementation, make them binding for anyone who accesses the website.

What Is the Purpose of Website Terms of Use?

The Terms of Use are adopted with the purpose to protect your business, published content, your rights, and obligations, but also to protect your users and the content they may post on your website.

By publishing the Terms of Use, users have a chance to get informed about what they can expect from you, but also what you expect from them.  This way, you will build a trusting relationship with your users and therefore strengthen your business and reputation.

Additionally,  there are certain laws that prescribe an obligation for the website owner to provide appropriate information to the website users (for example, consumers).

For example, according to the Law on Electronic Trade, as a service provider, you are obliged to provide the following information to your users, and the state authorities as well:

  • Business name or company name,
  • Seat
  • The E-mail address and another contact,
  • Registration data in the Registry of Business Registers Agency, company TIN.

The Consumer Protection Law also prescribes the obligation to inform and provide the necessary information through the website, from listing your contact data to other notifications concerning the services or products that you offer.

The same rules apply to the territory of the EU, where three Directives – the Consumer Rights Directive 2011/83/EU, the Unfair Commercial Practices Directive 2005/29/EC, and Consumer ODR Regulation (EU) 524/2013 define mandatory information that must be provided to consumers and users.

To comply with these regulations, you may draft appropriate Terms of Use which will contain all the necessary information and notifications to your users.

Are Terms of Use Required for Every Website?

Unlike the website Privacy Policy, which is a mandatory element of each website, it is not mandatory to have the Website Terms of Use.

So, when it comes to Privacy Policy, regardless of whether your website is intended only for the domestic market or it is oriented to EU countries, according to the Serbian Law on Personal Data Protection, but also according to the provisions of the EU General Data Protection Regulation (GDPR), you need to place a clear and transparent Privacy Policy on your website.

On the consequences of not complying with this obligation, you can learn more in our blog the 5 Consequences of Violating the Personal Data Protection Law in Serbia. Also, please note that if you are an owner of a company in Serbia, and through your website you process personal data of the data subject in the EU, you may fall under the extraterritorial application of GDPR, as we have already explained. This means that you may also face serious penalties for violating this act within the framework of EU law.

Even though there are no explicit provisions (both under the Serbian and the EU law) requesting the placement of the Terms of Use on the website, this does not mean that you do not need them, or that you are better off skipping this step.

Are the Website Terms of Use Binding?

If you have decided to invest extra effort in your online business, and you have created and published the Terms of Use of your site, we come to the key step, which is: how to make the Terms of Use binding for your users?

If you do not implement this step properly, drafting the Terms of Use was a futile job and everything you have defined will remain a dead letter on the screen.

For the Terms of Use to be legally binding, it is necessary to explain them to the user in a clear manner, as well as to meet certain criteria in order to be executable and binding.

There are two ways to make your Terms of Use binding for your users – through clickwrap agreements and browsewrap agreements.

Clickwrap Agreement

Involves an active act by a user who must click “I agree” or “I accept” to continue using or use the website. The user has the choice to disagree with the Terms of Use, but will no longer be able to use the website, services, or purchase the product.

Browsewrap Agreement

Contrary to the clickwrap agreement, browsewrap does not imply active action by the user. In other words, the user is obliged to comply with the terms of use by simply continuing to use the website.

 

At first glance, the browsewrap agreement will seem far more tempting than clickwrap because you do not need to obtain the explicit consent of the user, i.e., no active act of the user is required. However, if you thought it was sufficient to state in the Terms of Use that the user agreed to the Terms of Use by proceeding with the use of the website and to “bury” the link of the Terms of Use in the footer of your website, that does not mean that the agreement will be legally binding or executable in relation to the users.

Also, a number of foreign (US and European) court practices speak in favor of the clickwrap agreements. One of the first court rulings that lead the way for the clickwrap agreements and their execution was issued back in 1998, in the U.S. case of Groff v. America Online, Inc.[1]

Nevertheless, in each case, it should be evaluated which option is the best for your Terms of Use, considering that clickwrap agreements are not always applicable. By this, we mean that it is clear that in certain situations there is no room to ask for the consent of any user who accesses the website. Besides, one can also use a mixed version, where the website can implement both clickwrap and browsewrap agreements at the same time. Therefore, it is necessary to properly implement the Terms of Use and find a balance between the best user experience and the highest level of protection of your rights and interests.

6 Reasons Why Your Website Should Have Terms of Use

It is irrelevant whether your site is only a presentation website, whether it enables the users to share some content, serves for providing services, or selling products, the Terms of Use are equally valuable and important for your business for at least the 6 following reasons:

1. Protecting the Content

As the owner of the website, it is natural that you want to protect the content of the website, starting from your trademark, brand, website design, or your intellectual property rights. Through the Terms of Use, you may protect your intellectual property and prevent any abuse by the website users, which may involve unauthorized copying and use of your content, logo, photos, texts, etc.

By accepting your Terms of Use, the user is committing to refrain from reproducing, distributing, selling, publishing, or broadcasting any material found on your website without your written consent.

In addition to the precautionary effect, by properly defining the intellectual property clause you will protect yourself in case of violation of any of your rights.

You can find more about the protection of intellectual property in our blogs 6  Reasons Why Trademark Registration Is Crucial for Your Business and IP Theft On the Rise – Have You Protected Your Business’s Intellectual Property?

2. Be Transparent with Your Users

Transparency is the number one condition for building trusting relationships with your users.

Besides, since the Terms of Use represent an agreement between you and the user, it is crucial that the user understand their rights and obligations, to comply with, and potentially refrain from certain behavior. You should provide your users with reasonable notice and the opportunity to learn about the content of your Terms of Use. This implies that Terms of Use must be easily readable, without excessive use of legal terminology and highly professional terms.

Also, make sure that you clearly define for whom the site is intended and whether there are certain limitations regarding the age of your users, in order to protect children and minors from content that is not intended for them.

If the Terms of Use do not meet these criteria, it will be very difficult to protect your rights in the event of a potential dispute with users. Specifically, the competent court may decide that users have not been notified in a reasonable and transparent manner, therefore the defined conditions will not produce a legal effect on the users.

ecommerce site terms and conditions

3. Prevent the Abuse

If the users have the ability to post any content on your website, including comments, reviews, photos, links, sending messages, using chat features, etc., you will want to prevent all kinds of abuses, such as:

  • Inappropriate and unwanted comments,
  • Hate speech, insults,
  • Spam,
  • Harassment of other users.

By clearly defining the rules of conduct and consequences if users violate them, you will prevent these abuses and protect yourself and your users.

Thus, you can use this opportunity to inform users about the behavior which is considered absolutely unacceptable and what you will not tolerate on the website. If users do not comply with the defined rules of conduct, you must notify them of the measures you will take to further prevent violations of the provisions of the Terms of Use.

For example, you can prescribe that users will be denied access to the website, that their account will be deactivated, or that there will be disruption to further service provision, and cancellation of subscriptions, etc.

4. Limitations of Liability

Another reason why you need the website Terms of Use is to limit your liability for any potential errors, information, or the content of other users or third parties.

Therefore, through the Terms of Use, you will be protecting yourself from liability in cases where you cannot or should not bear the responsibility towards your users.

You must set up the appropriate disclaimer and notify users in which cases your responsibility is completely excluded or limited. This is especially important in cases where there are links to other websites (third-party websites) or advertising content on your website because you will want to exclude your responsibility in relation to the content available on these sites, as well as violations of the rights of users made by third-party site owners.

5. Clearly Define Your Terms of Payment

If you offer any services or products through your website, or if your users will be obliged to make a certain payment by giving consent to the Terms of Use, defining the terms of payment in a precise manner must exist on your website.

For example, if users will be able to subscribe to a particular service or content through the website, or pay some kind of membership fee, you must define prices, currency, additional costs including taxes, payment methods, payment returns policies, etc.

The Serbian Law on Consumer Protection and the Law on Trade explicitly prescribe[2] this obligation, and similar obligations are provided by special EU directives.

In addition, electronic payment security rules are further regulated in the EU through special directives known[3] as PSD1 and PSD2, which you need to adhere to if you are oriented to the EU market.

The best way to define the terms and rules of payment is through the Terms of Use of the website. In a separate section focused on these rules, you will regulate the rights and obligations of your users, and in the event of a potential payment dispute, the well-defined provision will provide you with better protection.

6. Define the Applicable Law and Jurisdiction for Dispute Resolution

Perhaps the most important provision for you, if your website is intended for users from various countries, is the provision that defines which law is applicable to this agreement and under which jurisdiction the potential dispute will be resolved. If you do not define the applicable law, while having users from various countries, that may potentially lead to the application of any law in the world.

For example, let’s say that your firm is registered in Serbia and that you do business from there, you will certainly want the Serbian law to be applied to the agreement, as well as to have any dispute resolved by a Serbian court or arbitration. In that manner, you can avoid the unnecessary costs of going to another country and paying the costs of foreign lawyers to interpret foreign regulations. Also, you will want to apply the same principle wherever you are – if you are in London, you will want to enforce British law, in California, etc.

Certainly, the more users from different countries you have, the greater the risks that you are exposed to if you do not define the appropriate applicable law and the dispute resolution. By missing to define this clause, you can potentially find yourself in a situation where you are fighting one dispute in China, one in Australia, and one in Spain. In addition to the enormous costs that you will have to bear before the court decides who is right, you will bear a huge risk due to ignorance of foreign regulations and potentially extremely strict or adverse rules that can be applied in relation to you.

Specifics of the Terms of Use for E-commerce

In a separate blog post, we thoroughly wrote about the key things you need to know before you start e-commerce.

So, we have noted that, from the aspect of e-commerce, in addition to the above-mentioned reasons, adopting the Terms of Use may be your legal obligation. According to the Serbian regulations, each e-commerce store is obliged to provide appropriate information to customers and consumers. Some of this information can be provided through the General Terms of Service by which you define the terms of purchase (from the way of ordering the product, delivery, price, payment, drop of purchase, etc.), but it is more appropriate to define certain provisions through the separate Terms of Use.

For example, listing your identification data, protection of intellectual property, and instructions on leaving the comments and reviews for the products you offer, it is certainly better to have them regulated by the Terms of Use of the website. This is primarily because the Terms of Use apply to any person who accesses the e-commerce store, regardless of whether the person actually purchases something. On the other hand, general Terms of Service are primarily related to your customers and persons interested in your products, therefore to the narrower circle of persons.

Besides that, in order to relieve general Terms of Service and avoid lengthy texts that will reduce transparency and understanding of the conditions you offer, it is recommended that e-commerce stores specifically regulate general Terms of Service and website Terms of Use.

What Can Happen if I Copy the Terms of Use from Another Website and Put it on My Website?

If you have come across a website that is similar to yours and thought it was a good idea to simply copy someone else’s Terms of Use and customize them a bit for your website, we suggest you give up the idea immediately. No matter how tempting it may seem to you, and even if you think that no one will notice, do not succumb to this temptation.

First, copying someone else’s content can be a violation of someone else’s intellectual property rights.

Simple substitution of words, using synonyms, or changing the word order in a sentence does not mean that you will bypass copyright protection, or that you will not violate other people’s copyrights. The same applies if you have downloaded other people’s Terms of Use and only translated them from a foreign language.

If you infringe on someone else’s copyright, the consequences can be serious. First, the author may initiate litigation against you and demand compensation for the damage you caused them by violating their intellectual property rights. It is important to emphasize that the author will have the right to claim both the actual damages and the lost profits they suffer due to rights violations. Compensation amounts in litigation can reach as much as tens of thousands of euros.

In addition, you are threatened with prosecution by the author, i.e., intellectual property rights holder, and for these crimes, both fines and sentences of up to 5 years are prescribed in the Republic of Serbia.

Secondly, it is highly likely that you will not be able to really comply with all the terms and obligations specified in the copied Terms of Use, or some provisions will not apply to you, which is why you will not have almost any protection in case of a dispute with users.

All of this can lead to serious problems with users, who will leave negative comments and reviews on both your website and various other forums and platforms due to dissatisfaction.

In the end, there is a huge reputable risk if you decide to take this step, since stealing someone else’s copyright can seriously damage your reputation and reputation in the market. It is certain that neither users, associates, nor competitors will take you seriously, because your behavior will show that you do not take care of the protection of your rights, nor the protection of other people’s rights.

In addition, you are threatened with prosecution by the author, i.e., intellectual property rights holder, and for these crimes, both fines and sentences of up to 5 years are prescribed in the Republic of Serbia.

Secondly, it is highly likely that you will not be able to really comply with all the terms and obligations specified in the copied Terms of Use, or some provisions will not apply to you, which is why you will not have almost any protection in case of a dispute with users.

All of this can lead to serious problems with users, who will leave negative comments and reviews on both your website and various other forums and platforms due to dissatisfaction.

In the end, there is a huge reputable risk if you decide to take this step, since stealing someone else’s copyright can seriously damage your reputation and reputation in the market. It is certain that neither users, associates, nor competitors will take you seriously, because your behavior will show that you do not take care of the protection of your rights, nor the protection of other people’s rights.

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