Today, running an online business means more than having a polished website or a smooth checkout process. Every click, sign-up, or purchase creates a legal relationship between you and the users. That relationship is typically defined by your Terms of Service (TOS). When drafted properly, your TOS can protect your brand, limit risk, and determine how disputes are handled. Conversely, when done poorly or ignored altogether, they offer little protection when problems arise. So, the real question is: Do your Terms of Service actually work for your business?

What Should Be Included in Your Terms of Service?

At a minimum, your Terms of Service should clearly explain how users may interact with your platform. This includes restrictions on use, such as prohibiting misuse, reverse engineering, or unlawful activity. Your terms of service should also spell out what happens when users break the rules.

Intellectual property ownership is another must-have. Your terms should clearly state that your website content, branding, and technology belong to your business. Additionally, you should include limitations of liability and disclaimers that define the extent of your responsibility if something goes wrong. Finally, your TOS should identify which laws govern the agreement and how disputes should be resolved.

The exact details depend on your business model. As an e-commerce business, you may need sections on payments, shipping, and cancellations.

Key Clauses That Reduce Legal Risk

Your TOS must include specific clauses that mitigate legal exposure and control the litigation process, including:

Disclaimers and Limitations of Liability

Disclaimers of warranties allow you to state that your services are provided “as is,” without guarantees beyond what you explicitly promise. On the other hand, limitation of liability clauses can cap potential damages and prevent a single dispute from threatening your entire business.

Choice of Law

Choice-of-law and forum-selection clauses are essential for online businesses, especially if your business serves customers across multiple states or countries. These clauses determine which state’s laws apply and where disputes must be filed.

Intellectual Property Ownership

If your platforms include original content or software, your TOS should leave no ambiguity about ownership. Users should receive a limited license to use your service, not ownership rights. If users upload content, your terms should define what rights your business has to host, display, or reuse that content. This clarity is critical, especially on social media platforms and any site that features customer submissions.

Making Sure Your TOS Is Enforceable

Even the best-written terms of service are useless if they are not enforceable. There has to be explicit user consent, and simply placing a link in the website footer may not be enough. To better protect your business, it’s essential to have users take an affirmative action showing agreement.

The strongest method to make your terms of service enforceable is through a “clickwrap” agreement. This is where users actively check a box or click “I Agree” next to a visible link to the terms. Some businesses use a “sign-in wrap” agreement, where assent is tied to logging in or completing a purchase. This ensures you are not leaving any room for error, preventing you from costly litigation.

Contact the Internet Law and Social Media Attorneys at Revision Legal

For more information, contact the experienced Internet Law and Social Media Lawyers at Revision Legal. You can contact us through the form on this page or call (855) 473-8474.

Clickwrap vs. Browsewrap: Courts Are Watching

The method by which users accept your Terms of Service is as legally important as the terms themselves. Courts have distinguished between clickwrap agreements—where users must check a box or click an explicit “I Agree” button—and browsewrap agreements—where terms are posted on the site with a notice that continued use constitutes acceptance. Federal courts have routinely refused to enforce browsewrap agreements where the notice was not conspicuous and the user had no actual knowledge of the terms. In Nguyen v. Barnes & Noble, Inc., 763 F.3d 1171 (9th Cir. 2014), the Ninth Circuit held that a browsewrap arbitration clause was unenforceable because there was no evidence the user had been made aware of it. The safest practice is to implement clickwrap consent at the point of account creation and again at checkout for high-stakes terms.

Arbitration Clauses and Class Action Waivers

A mandatory arbitration clause coupled with a class action waiver is one of the most powerful liability-limiting tools available in a TOS, but it must be drafted and presented correctly to survive a motion to compel. The Supreme Court upheld class action waivers in consumer contracts in AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011), and reinforced arbitration as a favored dispute resolution mechanism in Epic Systems Corp. v. Lewis, 584 U.S. 497 (2018). However, courts have carved out several grounds for invalidating arbitration provisions: unconscionability, procedurally or substantively; and in some states, public policy exceptions for certain claim types. Your arbitration clause should specify the arbitration provider, the governing rules, the seat of arbitration, the allocation of arbitration fees, and a clear class action waiver.

Governing Law and Forum Selection for Multi-State Businesses

Choosing the right governing law clause is a strategic decision, not a boilerplate exercise. Delaware is popular for corporate governance reasons, but if most of your customers are in California, California courts may refuse to apply a Delaware choice-of-law provision to consumer claims, particularly where California’s consumer protection laws—the CLRA (Cal. Civ. Code § 1750 et seq.) and Unfair Competition Law (Bus. & Prof. Code § 17200)—provide greater protections. Forum selection clauses specifying federal or state courts in a particular jurisdiction are generally enforceable under The Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972), unless enforcement would be unreasonable or unjust.

Updating Your TOS Without Losing Enforceability

Many businesses update their TOS periodically to address new features, regulatory developments, or lessons learned from disputes. A unilateral modification clause is generally enforceable if: (1) notice of the modification is provided to existing users by email or prominent in-app notice; and (2) continued use of the service constitutes acceptance of the new terms. In Douglas v. U.S. District Court (Talk America, Inc.), 495 F.3d 1062 (9th Cir. 2007), the court emphasized that a party cannot be bound by terms it has not had notice of. Best practice is to send email notice of material changes, describe the nature of the changes, and provide a 30-day window before they take effect.

User-Generated Content, DMCA Safe Harbor, and Section 230

If your platform allows users to upload content, your TOS must address user-generated content (UGC) ownership and your rights to use it. A well-drafted UGC clause grants your business a broad, irrevocable, royalty-free license to display, transmit, reproduce, and distribute user content on and through your platform. Additionally, to qualify for DMCA safe harbor under 17 U.S.C. § 512, your TOS must include a designated DMCA agent registration with the Copyright Office, a clear notice-and-takedown policy, and a repeat infringer termination policy. Failure to maintain safe harbor protection can expose a platform to substantial statutory damages for its users’ infringement.

A Terms of Service agreement is one of the most important legal documents your business maintains, and it must be reviewed and updated regularly to remain effective. Revision Legal drafts, reviews, and updates TOS agreements for online businesses of all sizes. Contact us to have your current terms evaluated, or visit our Internet Law practice page for more information.