You’ve taken the plunge and started your online business.
You are super excited and can’t wait to get things rolling.
Building sales funnels.
Writing blog posts.
Running Facebook ads.
Recording your first podcast episodes.
Getting your first paying clients.
But there’s only one thing you’ve forgotten… How to make sure you aren’t breaking any laws while at the same time protecting your new venture.
In other words… you need a contract. (Maybe more than one, but you aren’t entirely sure…)
You’ve heard about privacy policies and terms of use agreements, but you don’t know what they are, what they do, or whether you need them for your website.
Put another way… you don't know what you don't know… especially when it comes to legal contracts online.
Building the business, getting clients, making the money… you’ve got that covered.
But getting all legal and legit?
You haven’t a clue.
That’s why I wrote this post.
I wanted to share with you everything you need to know (but don’t) about legally protecting your online business with contracts.
Written in a non-lawyer way, so it’s easy for you to understand.
Sound good?
Let’s dive in and protect your biz.
What Will This Post Cover?
I called this post the “Ultimate Guide to Legal Contracts for Your Online Business” for a reason. This is THE authoritative guide for everything you ever needed to know about real, legitimate, legal contracts online.
We’ll start by going over who I wrote this guide for, and who needs to worry about using contracts for their online business.
Then we will discuss why online contracts are so important, even though most online entrepreneurs think of them as an afterthought.
Next we will go over the different contracts you should be using in your online business, as well as a brief description of what each does and why you need it.
We will touch briefly on when you need to start throwing these contracts up on your website, as well as where you will put them. (Hint – they don’t all go in the footer).
Then we will finish up by discussing the 4 most important contracts that you need on your website and why you need them (another teaser – the government says you need two of these on your website, or else you could face some major flack from the FTC).
And finally, I have a pretty sweet offer for you to grab up one of these legally required contracts for free, along with video instructions on how to properly use it.
Let’s get started, shall we?
Who needs to read this guide? (i.e. Whether you need legal contracts online for your business…)
I hate to break it to you, but if you have a business with a web presence on your own website, then you probably need to take a few minutes and read through this post.
So whether you are an online marketer, an affiliate, a freelancer, a photographer, an e-commerce seller, a provider of productized services, or pretty much anyone else that markets your business online – you need online contracts to protect your online business.
And I’m not just saying this because I’m a lawyer, I’m telling you this because I’m a lawyer that has seen what can happen when businesses do NOT have the proper contracts in place for their online business.
It’s not good.
Not only that, but there are at least two types of contracts which I will describe in a bit that are legally required by the government to be placed on your website.
So basically, if you are operating any type of business that is maintains an online business, then you need to keep reading.
I’ll do my best to keep this light, fluffy, and non-legalese sounding.
Why are online Contracts so important anyway?
Most online entrepreneurs think of contracts as an afterthought.
An added expense…
A way for lawyers to make a quick buck…
An unnecessary and frivolous headache that are reserved for bigger corporations, not solopreneurs.
Am I right?
When most people think of contracts, they think of the legal documents they sign when they buy a car, or sign up for a cell phone, or put an offer on a house.
Few people understand that online contracts are even more prevalent now than many of those old paper contracts you are so used to.
The truth is that well-written contracts, whether in paper form or on a website, are equally enforceable in a court of law.
What does that mean for you?
Online contracts can help you in a number of ways, including the following:
- Preventing refunds
- Protecting your intellectual property
- Providing choice of law provisions
- Dictating where you will go to court in the event of a lawsuit or disagreement
- Outlining how and when you will be paid
- Complying with state and federal laws for privacy and affiliate disclaimers
- Providing alternative dispute resolution provisions
- Dictating how visitors to your site may act
- Giving you license over the content that visitors post to your website
- And much more…
Courts, generally speaking, prefer to uphold valid contracts.
So if drafted correctly, your online contracts can provide you with a great deal of protection for your online business.
Are they even enforceable?
The appropriate legal answer here is, “it depends”. To be valid, there must be a number of legal elements present in your contracts.
The absence of any one of those elements could render your contract meaningless. To increase the likelihood that your online contracts are valid, you should:
- Make sure that links to your contracts are clear and conspicuous so that a visitor to your website or purchaser of your services can easily find and review the terms of your contract
- Include a provision in your online contracts that your terms and conditions are subject to change without notice
- If someone purchases products or services from you and you subsequently change the terms of your online contract, you should notify the customers of the change
- Maintain a complete record of your online terms and conditions so that you know what contract was in place at what time
- Make sure that all the “boilerplate” language in your online contracts is valid and relevant to your situation.
As always, if you are in doubt as to whether your contracts are valid and accomplish what you want them to do, you should consult with a lawyer regarding any questions you have.
What different contracts should you be using in your online business?
There are four main contracts that you need to be using in your online business. They are the Privacy Policy (required by law), Terms and Conditions, Disclaimers, and Terms of Service for a Membership Site.
Let’s take these one by one…
Privacy Policy
A privacy policy is required by law in many states. But since you are an online business, you most likely are conducting your business in all states (and frankly, anywhere in the world where there is an internet connection).
So if you have a website, and you collect information from your visitors (i.e. email address, name, credit card information, etc.) then you MUST have a privacy policy on your website.
Let me be clear… THIS ISN’T OPTIONAL.
If you don’t already have a privacy policy on your website, or if you do, but you aren’t sure whether it is legally sufficient, then you can sign up for my Online Business (legal) Toolkit that will provide you with a legally proper template that you can use on your website.
Terms and Conditions
The terms and conditions page is the main legal contract on your website. In other words, it is a legally binding contract between your business and the visitors to your website.
It tells your visitors what they can and can’t do on your website, i.e. its a set of rules and guidelines that visitors to your website agree to follow in exchange for the right to visit your page.
Here are some of the things that a terms and conditions page can do for you.
Prevent Abuse
A terms and conditions policy can help to prevent users from abusing your website. Abuse can take many forms, but is typically done through spamming, posting defamatory or obscene content, etc.
If your website has areas that allow others to post their opinions or content, then you can let those contributors know what will and will not be tolerated, and that by violating this provision in your terms and conditions will get the offending party banned from your site.
Protect Your Content
The terms and conditions policy will inform visitors to your site that you are the owner of your website, logo, content, etc.
You will also inform the users of your website that all of your content is protected by international copyright and other laws. This is what is known as the “intellectual property clause”, and here is an example of what this provision will look like:
The Site and Service contain intellectual property owned by (Business) including, without limitation, the (Business) logo, all designs, text, graphics, other files, and the selection and arrangement thereof, also termed the “look and feel,” trademarks, trade dress, copyrights, proprietary information and other intellectual property.
All of the content, features and functionality as described above are owned by (Business) and are protected by international copyright, trademark, patent, trade secret, and other intellectual property or proprietary laws.
Limit Your Liability
It is helpful to include in your terms and conditions agreement a warranty disclaimer. This disclaimer will limit your liability in the event that your website contains factual or inadvertent errors in its content.
By including this provision, you are letting your readers know that you will not be held liable if anything you write is inaccurate, incomplete, or otherwise dated.
Governing Law
The governing law provision will tell your site visitors which law will govern the interpretation of your terms and conditions contract.
Similar to the governing law provision is the forum selection clause, which tells the user where disagreements regarding the terms of your contract would be litigated.
If you don’t have a governing law or forum selection provision in your terms and conditions contract, then you could be sued pretty much anywhere in the world.
Instead, make sure to include a simple provision such as this:
This Agreement shall be construed in accordance with, and governed by, the laws of (Your state) as applied to contracts that are executed and performed entirely in (Your state). The exclusive venue for any arbitration or court proceeding based on or arising out of this Agreement shall be (Your County) County, (Your State).
Disclaimers
Disclaimers are relatively simple to understand – you are telling visitors to your website that you are not providing any professional advice.
For example, if you are a therapist who treats anxiety, you will tell visitors that your website provides information only and that they should not rely on your website as professional advice. Furthermore, you should direct visitors to seek out the help of a licensed therapist if they need additional information or advice.
The same is true if you are a doctor, accountant or even a lawyer.
And in each of these situations, special ethics rules or otherwise may apply, so you will need to check with your state regulators or other governing bodies.
But the basic idea here is to let people know that you cannot provide them with any type of professional advice.
What about affiliates?
Affiliates are a special situation. The FTC (Federal Trade Commission) is cracking down hard on online marketers – they want to make sure your disclaimers are clear and conspicuous.
If you are promoting products or services, and you will receive a commission if the visitor purchases that product or service, you must make a clear and conspicuous disclaimer of your affiliate relationship.
Typically this should be done at the beginning of any page on your website that contains an affiliate link. The FTC says that this doesn’t have to be anything special – and that you don’t even need a lawyer to draft the disclaimer.
Something as simple as ”The author will receive a commission if you purchase the product listed below,” can suffice.
NOTE: Including an affiliate disclaimer in your footer is NO LONGER GOOD ENOUGH.
You just need to make sure that the disclaimer is clear on the page that contains the affiliate links.
Terms of Service for a Membership Site
If you are creating a membership site for your online business, then the terms and conditions you created previously are not sufficient for paying members to your site.
You will need a separate legal agreement that governs payments, refunds, permissible use of the site, intellectual property issues, etc.
Although this contract will contain many of the same clauses as your terms and conditions page, it will include many more provisions that can protect your business from mistakes you may make (or not make) on your site.
When you transfer someone from a reader of your information to a purchaser of your products or services, you take on a new relationship with that person.
And because they are now (presumably) paying you money, you have an added responsibility to provide them more services than you would by just posting content on a blog.
Having a strong contract for a membership site is especially important because the relationship is more long term than if they are simply purchasing a one-off product from you. They will be a long-term client, and as such, you need new and additional protections.
Some of the clauses you may want to include are:
- Refund policy
- Terms and frequency of payment
- Renewal policy
- Description of services provided
- Permissible use
- Intellectual property rights to materials submitted by customer
When Should You Get these Contracts Up on Your Website?
Frankly, I advise my clients that the first pages they put on their website should be a privacy policy, a terms and conditions agreement, and all requisite legal disclaimers.
The longer you wait, the easier it is to forget to take care of these things – so don’t wait.
Also, as soon as you start to build out landing pages for use with your Facebook ads or Google paid ads, you must link to the privacy policy and terms and conditions anyway – so you might as well get them drafted now.
No need to wait. Get them done today.
Also, it goes without saying that you should have a strong contract drafted and ready to go anytime you offer anything for sale on your website, whether it is a $7 tripwire or a $2,000 course or a $97 per month membership site.
The Online Contract – Final Thoughts
Don’t underestimate how important and powerful your online contracts are. You need to take this stuff seriously.
I know it’s hard. I know you don’t want to budget for the legal stuff.
But trust me, as someone that has been practicing law for 12 years and has seen what can happen when clients do NOT have the proper contracts in place, it is a huge and expensive mistake.
It typically costs much more to hire a lawyer to fix your contracts after the fact than it does to just get them right at the outset.
Do yourself a favor and get these right today.
