Because of its importance, there are 5 main reasons why you should have a Terms and Conditions agreement: to prevent abuses, to protect your creative content, to terminate accounts, to limit your legal liability and to set your governing law.
This article will look further into each of these reasons why you should have a Terms and Conditions agreement.
Also check out our Terms and Conditions FAQ for more helpful insight into these important agreements.
Our Terms and Conditions Generator makes it easy to create a Terms and Conditions agreement for your business. Just follow these steps:
At Step 1, select the Website option or the App option or both.
Answer some questions about your website or app.
Answer some questions about your business.
Enter the email address where you'd like the T&C delivered and click "Generate."
You'll be able to instantly access and download the Terms & Conditions agreement.
Reason #1: Prevent Abuses
The #1 reason why you need a Terms and Conditions agreement is to prevent abuses.
Your Terms and Conditions agreement helps you prevent abuses by setting out your right to terminate accounts of people who commit abuses.
A Terms and Conditions agreement acts as a legally binding contract between you and your users. It's the agreement that sets the rules and guidelines that users must agree to and follow in order to use and access your website or mobile app.
In this agreement, you can include the necessary sections to inform users of the guidelines of using your website or mobile app, what happens if users are abusing your website or mobile app, and so on.
Examples of actions of abusive users can include spamming other users, posting defamatory content or attempting to infect the website or app with malware.
If your website or mobile app hosts content that is generated by users, you can include a clause in the Terms and Conditions to inform users that harmful language won't be tolerated, as well as spamming other users (depending on the function of your website: via public or private messages).
All of these can result in having those users who are found abusing your website temporarily banned.
Here's how Verizon addresses what is and isn't acceptable when using its site or services:
Reason #2: Own Your Content
The #2 reason why you need a Terms and Conditions agreement is to own your content.
Your Terms and Conditions agreement helps you own your content by allowing for clauses to address intellectual property and copyright.
As the website owner, you're the owner of your logo, content (except for user-generated content, as most websites will inform users that any content created by users is theirs), the design of the website, and so on.
In your Terms and Conditions agreement, you can inform users that you are the owner of such content (as mentioned above) and that the content you own is protected by international copyright laws.
This kind of clause is commonly referred as the Intellectual Property clause, and it usually looks like this:
The Site and its original content, features, and functionality are owned by [Owner of Website] and are protected by international copyright, trademark, patent, trade secret, and other intellectual property or proprietary rights laws.
The Terms of Service page of Insider Inc. includes an Intellectual Property clause that clearly explains that the content is owned by the company:
Reason #3: Terminate Accounts
The #3 reason why you need a Terms and Conditions agreement is to terminate accounts.
When you include a clause that deals with termination of user accounts, you maintain your right to do this when needed. This clause informs users that abusive accounts will be terminated and banned from using the service.
If Reason #1: Prevent Abuses suggested that you could temporarily ban users, another common clause that Terms and Conditions agreements include is the Termination clause.
The Termination clause is aimed at websites that have a registration section (e.g. user must register before using and/or accessing certain sections of the website), as you can disable or ban the abusive users based on the activity of their accounts.
The Termination clause usually looks like:
We may terminate your access to the Site, without cause or notice, which may result in the forfeiture and destruction of all information associated with your account. All provisions of this Agreement that, by their nature, should survive termination shall survive termination, including, without limitation, ownership provisions, warranty disclaimers, indemnity, and limitations of liability.
Here is how the Terms & Conditions of The Guardian presents this clause:
Reason #4: Limit Liability
The #4 reason why you need a Terms and Conditions agreement is to limit your liability.
Terms and Conditions agreements commonly include a warranty disclaimer and limitation of liability clause that try to limit the website owner's liability in cases where errors are found in the content presented on the website, where the service isn't operable at 100 percent of the time, or if a product you sell turns out to be faulty.
This kind of clause notifies users that the owner can't be held responsible for any errors in the content presented, or for the information provided being accurate, complete, or suitable for any purposes, etc.
Here's an example of such a clause from Zendesk:
Reason #5: Set the Governing Law
The #5 reason why you need a Terms and Conditions agreement is to set the governing law.
The Governing Law clause of a Terms and Conditions agreement lets you set out the legal jurisdiction that applies to the Terms.
For instance, if your website is operated by a registered business in the state of New York in the United States, then the governing law of your Terms and Conditions would be presented something like this:
These terms and conditions are governed by the laws of the United States of America and the laws of the State of New York.
If you (or your company) operate the website from London in the United Kingdom, that clause can look something like this:
These terms and conditions are governed by the laws of United Kingdom.
If you operate your website from another country (Australia, UK, Canada, South Africa), update the agreement to include the home country or the country in which your company (that owns and operates the website) is registered in.
While there are plenty of other reasons why you should have a Terms and Conditions agreement with your website, online service or mobile app, these are a few of the most important ones for the widest range of businesses.