Virtually every business, whether it’s long established or a startup, relies in part on maintaining an interactive website. As such, there should be a contract that governs the relationship, rights and responsibilities of the business and its website users. Such a contract typically includes terms of service and a privacy policy.

Terms of service, also called terms of use, serve to shield the company from various types of legal liability, to limit the ways in which users engage with the website and to protect the company’s intellectual property. Some of the important issues to address in the terms of service include:

• Purchase procedures, such as those regarding payments accepted, shipping policies, cancellations, refunds and exchanges
• Disclaimers of liability for company errors in the website information, for errors in third-party information on the website and for any comments or endorsement left by third parties
• Reservation of rights in the company’s intellectual property and disclosure of a clear policy regarding infringement
• A code of conduct for users, specifying violations that may result in termination of service

More specific terms and conditions may be included depending on the nature of the business and the company’s priorities. To best serve the company’s interests, management should consult a qualified business lawyer to draft appropriate terms of service.

The second essential part of a web contract is a privacy policy. This is a disclosure that details how the business will treat any of the users’ information it collects from the website. Companies operating on the worldwide web routinely collect, store and use information provided by customers online. There are federal and state laws designed to protect users from misuse of this data. These laws limit the ways in which private information can be used and shared with company affiliates and third parties. Online businesses must disclose the scope of customer data collection and provide details on how this information will be used.

Privacy disclosure requirements apply even to basic information such as the user’s name and e-mail address. As such, these laws may apply to websites that sell nothing and only provide users with information at no cost. In addition, privacy disclosures must accurately state how the company uses customer information. The penalties for failing to comply with the law or misstating how the company uses data can be harsh. Therefore, the privacy policy should be professionally drafted and reviewed periodically for necessary changes.

The Law Firm of Joseph M. Udall, PLC in Mesa represents Arizona companies in a wide variety of matters. If you wish to protect or expand your online business or need other commercial legal services, contact us online or call (480) 500-1866 for an initial consultation.