2.Terms of Service Defined
A "terms of service" agreement (also referred to as a "service agreement") is a type of relationship contract that governs the use of a service and describes how a service should be used and what responsibility a user has in relation to a service. Generally, terms of service agreements operate by informing a user of how a particular service is supposed to work. They set forth the rules of interaction, such as acceptable online behavior , system performance obligations, social media etiquette or where and how a service may be utilized. These agreements not only describe the rights and responsibilities of a user, but also set expectations regarding a service provider’s responsibilities. Accordingly, terms of service agreements are often times broken down into the following categories:
In most cases, a service provider requires a user to agree to the terms and conditions before the service is provided.
3.Defining Terms and Conditions
The phrase ‘terms and conditions’ has its origins in the Latin phrase ‘condicio’, which means ‘a stipulation’, and ‘term, which literally means ‘a period of time’. The idea is that Terms and Conditions govern the relationship between two or more parties by defining the obligations and rights of those parties over a period of time. Not all terms and conditions are the same and they all have different meanings and implications for the parties. Contracts of Employment Terms and Conditions will be drafted very differently to the Terms and Conditions of a Website.
4.Comparison of the Two
While the terminology often varies, the key difference remains the same: a Terms and Conditions document typically stipulates rights and duties between two parties, while Terms of Service documents govern the use of a service and often dictate the relationship between a business and its customers.
Thus, Terms and Conditions are most commonly used between two commercial parties, like a company and its vendors or suppliers. For example: The company ABC Corp enters into a Terms and Conditions agreement with XYZ Inc., whereby XYZ agrees to supply ABC with a particular product or component; in a consumer financing scenario, the end-user Mercantile Credit may issue a Terms and Conditions agreement to its clients for a new credit account. Many other examples exist; however, these two scenarios provide a general picture of how a Terms and Conditions document is used to govern the relationship between two commercial entities.
In contrast, a Terms and Conditions document is most often issued by a business or organization to its associates, clients, or customers (the end-user). For example: Where a company has a website with an online forum for users or customers to post and exchange information, it most likely issues a Terms of Service agreement that governs the relationship between it and the users of the forum; similarly, e-commerce platforms have terms of service posted on their website that govern the relationship between the operator of the website and its users; another example is a social media platform that files a Terms of Service agreement with its users prior to permitting them to join and use the platform (in contrast, a Terms and Conditions document would govern the relationship between that social media platform and its suppliers). Other examples of industries that typically issue Terms of Service agreements are gaming and software applications, banking and insurance, and telecommunications.
The differences between a Terms and Conditions agreement and a Terms of Service document can get blurrier when the two parties have an ongoing relationship and the agreement is a general governing agreement with respect to various transactions between the parties, or when there is a Terms and Conditions agreement between two commercial entities or an individual and a business as well as one or more Terms of Service agreements to govern their respective relationships. In these cases it is prudent to distinguish between the two agreements by clearly titling each agreement so they can be easily identified.
5.Legal Implications and Significance
From a legal perspective, terms of service and terms and conditions serve as a crucial legal document that not only provides information to users but also imposes legal obligations on both businesses and users. For businesses, they help protect their rights while limiting liability for issues that may arise. For users, they set out the rules that must be followed while using a service. Violation of these terms can, in some cases, lead to the termination of an account, loss of access to features , or even litigation.
The significance of these documents lies in their enforceability. Courts have generally upheld online agreements, such as clickwrap agreements (where the user agrees to the terms by clicking a button) and browse-wrap agreements (where the user consents to the terms by using the website, usually without clicking an explicit button), provided they are reasonably communicated to users. This means that if the requirements of contract formation are met (an offer, acceptance, and consideration), courts will likely uphold the validity of the agreement.
6.Best Practices for Creating
When it comes to drafting Terms, here are a few best practices:
- Introduction. Especially if you are working with a less sophisticated audience, start by providing a brief introduction explaining what terms are and why the ToS applies.
- Explain the goal of the ToS and its requirements. Every word in your ToS is not going to be read. But by including some short paragraphs at the top, you can paint a picture in the reader’s mind that they are being presented with a legal document that they need to read. Then after the front page, you can go into your detailed definitions, disclaimers, disclaimers, etc.
- Use short passages and bullet points. In today’s fast-paced Internet society, the average time a person spends scanning a webpage that has paragraphs of lengthy text is around 25 seconds before moving on to another website. To ensure that all-important terms end up getting read, you should organize them in short paragraphs (three to five sentences) or even bullet points.
- Avoid "legalese" as much as possible. Again this is a generalization, but by avoiding "legalese" and writing in a manner that is more palatable to the average person, you can ensure that your ToS will be read in its entirety.
- Write using understandable fonts, colors, and layouts. This is an often overlooked point, but it is important. Your ToS should use legible font styles in readable sizes, animated typefaces or excessive stroked-out displays should be avoided. Also, the background colors that you choose should not make reading text on the page difficult. Keeping to black text on a white background is ideal.
- Provide an FAQ. Your FAQ can cover the basics such as how to unsubscribe, open an account, or contact customer service. It can also touch on topics that may not be covered in your Terms.
7.Conclusion: Which Document is Right For You
Elevating customer trust and reducing risk are universal benefits of having clear terms, regardless of the document name. Through the careful consideration of business goals and product or service offerings , you can make an informed decision on whether to use a Terms of Service or a Terms and Conditions. Take the time early in the product development or procurement process to think through the implications of each type of document, how it should appear to users and how it can be customized to reflect your specific needs.