Terms of Use: What Is It and Do I Need One for My Website?

Terms of Use Agreements

When it comes to your website, the terms of use agreement (aka, “terms of service”, “terms & conditions” or abbreviated as “TOU”, “TOS” or “T&C”) is essentially a contract between the website owner (you) and your customers or users.

It lays out the rules for visiting or using your website and services. It’s like the big placard posted at the public pool in plain sight so people know what they can and should do (e.g., no running!).

Most websites have one and it is usually located at the footer of each page. Since most businesses need websites (even those that are just a one-location, brick and mortar business), it’s important to know what the terms of services are and whether your business needs one.

Here are some basic FAQs about terms of use or terms of service agreements:

Does my website need a “terms of use” or “terms of service” agreement?

The law actually does not require you to have one. BUT … it’s almost always a good idea to have one, especially if you have a website where visitors or users are allowed to post or contribute content.

Note that this is a different document than your privacy policy. If you collect any visitor’s personal data (think: email address, credit card info, etc.), the law does require you to have a privacy policy.

If the terms of use agreement is not legally required, what’s the point of having one?

The main goal of the terms of use is to lay out the ground rules for users or visitors coming to your website or using your services. This is also where you make clear what you (the website owner) will and, more importantly, will not be liable for.

You might be thinking, “What kind of trouble could a website possibly create for me?”

Surprisingly a lot. This is especially the case if you allow people to contribute or post content on your website. Let’s say that somebody posts an image on your website that they stole from someone else. Or let’s say it is defamatory. The last thing you want is to be sued because of someone else’s actions.

What is covered in a terms of use agreement?

There is typically two main categories of information in a terms of use agreement:

  1. The terms and conditions for buying or using any products or services offered through your website.

  2. Legal stuff laying out who is liable and for what.

What’s typically covered in the first category (i.e., the terms for buying or using any product or services)?

For terms and conditions of a sale, below are common things that are covered in the terms of use. These are business-specific and can vary widely from business to business:

  • Ordering and cancellation policy.

  • Payment terms and methods.

  • Delivery.

  • Refunds.

  • Warranties.

And what about the second category, the legal stuff - what’s typically covered there?

For the legal stuff, you will find most of these across all terms of use:

  1. Creating and maintaining an account. Users promise that the information they give the website owner (you) to create an account is their own information (i.e., they are not impersonating someone else) and that it is true and accurate. They can’t share their account with anyone else and it’s their responsibility to keep any passwords confidential.

  2. Prohibited uses. Users promise that they won’t hack into or disable the website. Also, users are not allowed to use the website for any illegal purposes.

  3. Ownership of Intellectual Property. This is a big one. Everything on the website - including any logos or posted content - either belongs to the website owner (you) OR the website owner has permission to post from other users. Users do not have permission to steal anything and use it for commercial purposes.

  4. No liability. The website owner (you) is not responsible for any damages from the use of the website, or is only liable up to a certain amount (e.g., price of services). The website owner is also not responsible for any content posted by another user.

  5. Rules and other issues for users posting content. If you allow users to post content on your website, this is where you lay down the rules on what can and cannot be posted. Users also give you a license to “use” their content on your website.

In summary, the terms of use makes it very clear what the user can and cannot do, as well as what you (the website owner) are and are not responsible for. Although not legally required, it’s a definitely a good business practice to have one on your website to protect yourself and your business.

Disclaimer: This article is for informational and educational purposes only, it is not legal advice.  It does not create an attorney-client relationship between you and Lawgood, its founders, or the author.  If you need legal advice, you should hire a lawyer. 


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Gina Pak

Gina is a co-founder and COO of Lawgood. She is an experienced business lawyer who loves to teach and empower entrepreneurs, especially when it comes to their business contracts. She graduated from Columbia Law School. You can find Gina on LinkedIn and Instagram.


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