While no one reads the terms of service agreement for many service providers—such as social media networks—creating an airtight agreement will protect your business from many future legal headaches.
What to Include in a Terms of Service Agreement
Here are four things businesses should include in a terms of service agreement.
Provide a Definition of Your Service or Product
This is something that essentially every kind of business—big or small—will want to include in its terms of service. By providing a definition of your product or service that is easy to understand, and can only be interpreted one way, you are mitigating any claim that someone was deceived by your product. In some ways, this is another form of small business insurance—as it removes ambiguity about what the customer can expect in return from your company.
Define Intellectual Property Rights
Many companies have their own intellectual property that they use to provide services to customers. Oftentimes, those customers actually produce intellectual property of their own through that proprietary service. Amazon is one example of a company that allows its customers to use its property to produce their own copyrighted materials.
If your company also operates in this way, you need to make it explicit that you maintain the rights to all your proprietary software or services. While it’s unlikely, someone might potentially try to take you to court if you don’t make it totally clear that using the service gives them no ownership over it.
Another issue arising from this is that a third party might accuse you of infringing upon their intellectual property. Sometimes it’s the case that companies use copyrighted material without even realizing it.
Put some form of contact information in your terms of service agreement so outside parties can contact you if they believe you have infringed on their intellectual property. Often, these issues can be easily resolved if you are upfront and fix the issue as soon as it’s brought to your attention.
Privacy Policy
Many of the businesses that require a term of service agreement are websites that collect user data in some way. If your company fits this profile, it’s imperative that you include a privacy policy in your terms of service agreement.
A privacy policy basically spells out how a user’s data is being collected and why. If you plan on selling people’s data for marketing purposes, make sure you say that in the terms of the service agreement. Otherwise, you might find yourself looking at a nasty class-action lawsuit.
Make Sure Everything Is Well-Written
It should come as no surprise that some businesses have tried to game their terms of service agreements by making vague statements within them. Even though this can seem smart, it’s incredibly foolish and will almost certainly end up coming back to hurt you in the long run.
The best course of action is to make your terms of service agreement as easy to understand as possible. You ideally want no phrases that can be interpreted in any way other than your intent. Having shaky language within a legal document is a surefire way to find yourself in court.
There are several services online that provide terms of service agreement templates. This can be handy for small business owners on a budget. However, if you’re really interested in protecting your company against litigation, the smartest thing to do is speak with an attorney who specializes in this type of business contract. Nothing can protect you entirely, but an expert lawyer will get your terms of service agreement as close as possible to flawless.