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Terms of use policies
How to set out clear terms of use for your company’s products and services.
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If you're setting up a website for your newly-formed company, it's important to include a terms of use policy for the products and services you will offer. This acts as a legally binding agreement with your customers and can protect your business from potential legal issues.
Let's take a look at what a good terms of use policy should include. Also, where you can find legal templates online with the right language to help make sure your business is fully covered.
What's in this guide?
What is a terms of use agreement?
A terms of use agreement details the rules that a user must agree to when using a website, product or service. Terms of use can refer to any policy that details how users engage with products and services, but they are most often applied to software applications, mobile apps and e-commerce websites. They apply to a website whether or not the visitor goes on to make a purchase.
The terms are intended to define acceptable use of the product or service, limit liability for the business and establish indemnification if a user breaches the agreement or violates the rights of a third party.
Am I required to display terms of use?
If your business sells goods and services it is necessary to display terms of use on the website to comply with the Australian Consumer Law (ACL). This ensures that potential customers understand their rights and responsibilities and agree to the terms before they proceed.
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Does your company belong in this list?
Where do these terms of use need to be displayed?
A terms of use policy should be displayed on a separate page on your business website. It is typically linked in the footer, so that it's accessible from every other page. It should also be linked from the account registration screen for the website or app.
Spotify, the music streaming service, features a link to its terms of use agreement from its website footer as well as above the Sign Up button on its registration screen.
Terms of use vs privacy policy
A terms of use policy sets out acceptable user behaviour and the rights that users grant to a business to be able to provide a product or service, including the handling of personal information.
A privacy policy, on the other hand, deals specifically with the way the business handles users' personal data and can either form a section of a terms of use agreement or a separate policy.
How do I write a terms of use page?
A terms of use page should be structured into sections with subheadings, bullet points and numbered lists that make it easy to read. A hyperlinked list of contents is useful for providing users with convenient reference points. The introduction should make clear that by using the service the user is agreeing to accept the terms as legally binding.
You can find document templates online that set out clauses you can customise to the needs of your specific business and save you from having to write out the legal language yourself.
What common clauses does a terms of use agreement include and not include?
The clauses included in a terms of use policy are intended to inform the user of their rights and responsibilities, as well as the responsibilities of the business in providing the product or service. For this reason, agreements tend to be extensive documents that contain numerous sections.
Typically included
There should be clauses covering the following details:
- The date the agreement became effective or was last updated
- Acceptance of terms
- User guidelines
- Copyright - read more about copyright lawyers
- Company responsibilities
- User account management
- Privacy policy
- Use of cookies
- Payment and billing processes
- Disclaimers limiting liability
- Indemnification against third-party losses
- Conditions for account suspension or termination
- The right to change/update the agreement.
Typically not included
You should avoid using intimidating legalistic language that could deter potential customers away from your business. Clear and well-organised terms avoid confusion and are more likely to be considered favourably by a judge in a law court if there is ever a legal dispute.
How effective are terms of use?
A terms of use agreement can be a highly effective document for protecting your business from legal disputes with customers and other users of your website, products and services. It is a legal requirement under Australian consumer law, and law courts will enforce an agreement that is clear, reasonable and agreed upon by all parties.
How to get customers to agree to your terms of use.
Users can be tempted to skip over reading lengthy terms of use documents. However, given that consent is needed to make them legally binding, it's worth taking steps to make sure that users actively agree to the terms.
One option is to place the terms of use policy in a pop-up on the website that users must click on to proceed.
Should I engage a lawyer in the process?
The importance of a terms of use page means that it can be valuable hiring a lawyer to draft or review the document to make sure it includes all the clauses your company needs for legal protection. They can write the agreement for you or you can customise a legal template and have them review it for you – which can be a cost-effective option.
More info on customisable templates
- Lawpath. Lawpath offers several tailored terms and conditions of use templates for different scenarios, including goods, services and mobile apps.
- LegalVision. LegalVision offers instant download of a customisable terms of use template for $49; or you can request a quote for a draft by a lawyer that includes a complimentary consultation.
- SprintLaw. SprintLaw offers fixed-rate packages including a set of terms and conditions drafted to the specific requirements of your business, phone consultations with a Sprintlaw lawyer, and a complimentary amendment to the final draft of your documents.
- Wonder.Legal. Wonder.Legal features a range of document templates that you can download for various fees, but its terms and conditions template is available to download for free.
Other legal documents you may need
When you are setting up a new business, you will also need other legal documents to protect your interests. These include:
- Mobile app privacy policy. Helpful if you also offer users a mobile application.
- Refund policy. Give potential customers confidence to buy your goods or services knowing that they can seek a refund if appropriate.
- Wholesale agreement. Useful if your business is buying or supplying products in bulk volumes for resale.
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