WEBSITE TERMS OF USE – MANDATORY FOR EVERY WEBSITE?

31
March 2021

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You’ve noticed that the vast majority of websites contain Terms of Use, but you’re not sure if you need another webpage with a bunch of tedious text that you don’t think anyone ever reads? What are the Terms of Use for, and are they needed even if the website is just a presentation website?

Are the Terms of Use binding? What are click-wrap and browser-wrap agreements?

Your e-commerce website already has General Terms of Service, do you need Terms of Use as well?

What can happen if I copy the Terms of Use from someone else’s website?

These are 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?

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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 this text, we will use the terms Terms of Use only for the terms of use of a website, regardless of whether it is a presentation site or an application through which the service or sale of goods is provided.

Therefore, the Terms of Use represent the type of agreement between you and your users.

When we say “agreement”, probably the first thing that comes to mind is a piece of paper that both sides sign to formalize their agreement and the terms of some cooperation. However, although they are not in paper form and there is no signing, the Terms of Use are the type of agreement that defines the appropriate rights and obligations of the contracting parties – you and your users. This includes a generation of agreements called Cloud Agreements, which has seen a remarkable expansion in the last decade.

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

What Is the Purpose of Website Terms of Use?

The purpose of the Terms of Use is 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.

Through the rules defined in the Terms of Use, users will know what to expect from you, but also what you expect from them in return.  This way, you will build a trusting relationship with your users and therefore strengthen your business.

In addition, under certain laws, you are obliged 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 state authorities:

  • Business name or company name,
  • Seat
  • E-mail address and another contact,
  • Registration data in the Registry of BRA, 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 you offer.

Identical rules apply on 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 clearly define mandatory information that must be provided to consumers and users.

To comply with these regulations, you can provide all necessary information and notifications to your users through the Terms of Use.

Are Terms of Use Required for Each Website?

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Unlike the website Privacy Policy, which is a mandatory element of each website, it is not explicitly stated that you must also have the Website Terms of Use.

Namely, in terms of Privacy Policy, regardless of whether your website is intended only for the domestic market or are oriented to EU countries, according to the Serbian Law on Personal Data Protection, but also according to the provisions of the GDPR, you are obliged to place a clear and transparent Privacy Policy on your website. For more on the consequences of missing this obligation, learn more about the 5 Consequences of Violating the Personal Data Protection Law in Serbia. Also, if you process personal data within the EU through your website owned by a company founded in Serbia, you may fall under the external 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.

Although there are no explicit legal provisions (both Serbian and EU regulations) regarding the mandatory placement of the Terms of Use, this does not mean that you do not need the Terms of Use and that you are better off skipping this step in the development of your website.

Are Website Terms of Use Binding?

Here we come to a crucial step in the development of your Terms of Use, 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 be clearly explained to the user, 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 relative to 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

It does not imply active action by the user as opposed to clickwrap agreement, and the user will be obliged to use the terms of use with a simple extension of the website.

 

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At first glance, 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]

However, in each case, it is necessary to evaluate which option is best for your Terms of Use, bearing in mind that clickwrap agreements are not applicable in situations where there is no room to ask for the consent of any user who accesses the website. In addition, there are mixed cases, where websites can use 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

terms of use, terms & conditions

It is irrelevant whether your site is only a presentation website, or you provide certain services, share content with your users, or even sell products, the Terms of Use are equally important and important for your business for at least the following 6 reasons:

1. Protect Your Content

As the owner of the website, you will want to protect the content on the website, your trademark, brand, website design, or your intellectual property rights. You will protect your intellectual property through Terms of Use and prevent any abuse by website users, which may involve unauthorized copying and use of your content, logo, photos, texts, etc.

By accepting your Terms of Use, the user shall be obliged not to reproduce, distribute, sell, publish or broadcast any material found on your website without your written consent.

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

We wrote more about protecting your intellectual property in 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 primary prerequisite for building trusting relations with your users.

In addition, since the Terms of Use are an agreement between you and the user, it is crucial that users understand their rights and obligations, to harmonize and potentially refrain from certain behavior. Your users must be able to receive a reasonable notice and the opportunity to learn about the content of your Terms of Use. This implies that Terms of Use must be easily legible, without excessive use of legal terminology and professional legalese expressions.

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, and the competent court may decide that users have not been notified in a reasonably and transparently, therefore defined conditions will not produce a legal effect on users.

ecommerce site terms and conditions

3. Prevent the Abuse

If users will be able to post different content on your website, from comments, reviews, photos, links, texting, 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.

Users must be notified of what behaviors are unacceptable and what will not be tolerated on your 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 predict that users will be denied access to the website, or a deactivated user account, or a disruption to further service provision and cancellation of subscriptions, etc.

4. Limit Your Liability

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

Therefore, through the Terms of Use, you will be protected in cases where you cannot or should not bear responsibility to 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 clear and transparent 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, methods and payment methods, payment returns policies, etc.

The Serbian Law on Consumer Protection and the Law on Trade clearly prescribe[2] this obligation, and similar obligations are defined 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 and with which you are obliged to align 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. Through a separate and clearly segregated section devoted to these rules, you will regulate the rights and obligations of your users, and in the event of a potential payment dispute, the properly defined provision will give you better protection.

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6. Define the Applicable Law and Jurisdiction for Dispute Resolution

The provision that defines which applicable law and jurisdiction will govern the Terms of Use for the dispute resolution is perhaps the most important provision for you, especially if your website is intended for users from various countries, which can 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 and that any dispute is resolved by a Serbian court or arbitration, in order to avoid unnecessary costs of going to another country and paying the costs of foreign lawyers to interpret foreign regulations. 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, the greater the risks for you if you do not define the appropriate applicable law and manner of 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, 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

We wrote about the key things you need to know before you start e-commerce in a separate blog post.

From the e-commerce aspect, for all the above reasons, properly defining the Terms of Use may be a 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 certain provisions are certainly better defined through separate Terms of Use.

For example, listing your identification data, intellectual property protection clause, ways of leaving comments and reviews for the products you offer, is certainly better 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 purchased 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.

Also, 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?

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If you have come across a website that is similar to yours and thought it was a good idea to simply copy other people’s Terms of Use and adjust them a little for your website, we suggest you give up the idea immediately. As tempting as it may seem to you and 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.

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