As an entrepreneur, it’s important to make certain legal information about your business easily available online. You’re probably already familiar with a Terms of Use Agreement from navigating other websites. This legal document is often linked in a web page’s footer, or may appear as a pop-up banner that visitors provide consent to before continuing use of the website.
Creating your own Terms of Use Agreement may seem like a daunting task for small business owners who aren’t comfortable with legal language, but thankfully Ownr has a solution. In this guide, we’ll walk through what a Terms of Use Agreement is, other names it can also go by, and what terms you should include.
What is a Terms of Use Agreement?
A Terms of Use Agreement is a legally binding document that explains the rules of use for your business’s website or app. Think of it as a contract between you and the visitors for using your website. It lays out what services your website offers, and what you expect from your visitors in return.
While you are not required by Canadian law to include a Terms of Use Agreement on your site, it is highly recommended as a best practice. Not only does a Terms of Use Agreement give your website credibility, but it also serves to protect your business from liability if there’s a legal dispute between you, the business owner, and a visitor or customer of your website.
Alternative names for a Terms of Use Agreement
Don’t get confused if you see a Terms of Use Agreement called different things. Here are some of its most common names:
- Terms and Conditions
- T&C Agreement
- T&Cs
- User Agreement
- Terms of Service Agreement
- Acceptable Use Policy
- Legal Information Page (which may house a variety of legal policies)
Terms of Use Agreement vs. Terms and Conditions Agreement: What’s the difference?
Both refer to the same document and can be used interchangeably (as well as any of the other names above). It’s important to note that neither are not the same as a Privacy Policy, which is a separate legal document (though they are commonly linked to each other).
Types of Terms of Use Agreements
There are a couple of different
Clickwrap agreement
A clickwrap agreement is a Terms of Use Agreement that appears as a popup or landing page upon landing on the website where the user must provide consent before continuing their use. While not the most common type of agreement on the web, the high visibility can have legal benefits, including the express consent that it requires. A user cannot continue to navigate your website without clicking that they accept the terms, making them stronger to enforce legally because the user cannot make the case that they were not aware of your website terms.
If you sell goods in certain countries, you may be required to display your Terms of Use as a clickwrap to receive express consent from anyone purchasing your goods (for example, the GDPR requires it to be sold to EU citizens). This is often done at the checkout point before the user can confirm their purchase.
Browsewrap agreement
A browsewrap is a more common way you’ll see a Terms of Use Agreement hosted on most websites. This is when a link to the agreement webpage is placed in the website footer. This means the user must navigate to this page themselves to review the terms. They are not prompted to consent to the Terms of Use Agreement upon landing on the site. Instead, the terms include language that specifies that consent is implied through continued use of the website.
Is a Terms of Use Agreement legally binding?
Yes, a Terms of Use Agreement is a legally binding document provided it abides by certain criteria:
- The Terms of Use Agreement is made apparent to visitors of the website
- Your website visitors must be able to easily find your Terms of Use Agreement for them to be legally enforceable.
- A clickwrap agreement will have a stronger legal argument compared to a browsewrap agreement, for example, because of its high visibility and consent needed for the user to continue the use of the site.
- The agreement is consented to by visitors of the website
Most Terms of Use Agreements will include language that will express the user’s continuing use of the website is considered acceptance of the terms. Others will require consent through the form of clicking an “I Accept” button. It’s important to make clear what actions the user is taking to consent, and what the consequences are if they do not consent or break the terms.
- It must follow the appropriate governing laws.
- It must also be fair and lawful. A user cannot consent to terms which go against the governing law.
- It must be clear to understand
- It is not meant to trick or deceive your users. It should be clear and easy to comprehend.
Is a Terms of Use Agreement considered a contract?
A Terms of Use Agreement may be considered a contract if it fits specific criteria. By definition, a contract must have a mutual agreement and consideration from both parties. Therefore, a browsewrap agreement likely won’t fit the criteria since the user can claim a lack of consideration and agreement if they did not review the terms. A clickwrap agreement has stronger enforceability since the user will have had to affirm their consent.
If there is a legal disagreement, a Terms of Use Agreement is still up to the interpretation of the court, so think about the type of business website you run and consider the possible legal cases you may face. If you have a relatively low-risk site with few terms set out, a simple browsewrap agreement may suffice. If your business has more complex terms, you may want to consider a clickwrap agreement and take care that your back-end records are tracking user acceptance.
How do I make a Terms of Use Agreement?
The Terms of Use Agreement you create should be appropriate and tailored for your business’s needs. Not just because you will have your own unique requirements but simply copying another site’s terms may be considered copyright infringement. Despite its formal name, your Terms of Use Agreement doesn’t require the use of overly formal language. In fact, having unique terms can give you and your business a sense of legitimacy—which is great for potential investors who are researching your company. You can take a look at these examples from Google, Instagram or Wikipedia if you want some inspiration.
Consider including the following within your Terms of Use Agreement:
- Information about the terms (ie. what users can expect from you)
- Effective date
- Rights, responsibilities, and rules for users (ie. what you expect from users)
- Definition of misuse and consequences (including guidelines around the termination of user accounts)
- Billing and payment agreements
- Definitions of key phrases or language used
- General disclaimers
- Limitation of Liability clause
- Information about use of the site’s intellectual property and user-generated content
- Disclaimer that terms are subject to change and any updates to the terms
- Information on your governing jurisdiction
- References and/or links to other policies (Privacy Policy, use of cookies, etc)
All of these can sound daunting and discouraging—especially for a new business owner. But with Ownr’s document builder, you can get it all done with a few clicks and confirmations. And as a Managed Corporation Plan user, you’ll be able to give access to a trusted lawyer to review your documents.
If you use Ownr, you have access to a suite of legal documents built and tailored to Canada’s legal landscape—this way you can painlessly streamline your Terms and Conditions documents for your business
Frequently Asked Questions About Terms of Use Agreements
What does Terms of Use mean?
As the name implies, a Terms of Use agreement outlines the rules of using a website or app. Plainly put, it tells the user what to expect from using your website.
Can I write my own Terms of Use Agreement?
Yes, you can choose to write your own agreement. However, you run the risk of having an inadequate or insufficient agreement. You can either use Ownr to build a clear and effective agreement, or if you still want complete assurance, you can also work with a lawyer.
What do you put in Terms of Use Agreements?
Your agreement should include information about the terms, and rules for using the website, definitions of key language and any relevant legal disclaimers and clauses. See the full list above for more details.
This article offers general information only, is current as of the date of publication, and is not intended as legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. While the information presented is believed to be factual and current, its accuracy is not guaranteed and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author(s) as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by RBC Ventures Inc. or its affiliates.