If you have been a follower of this blog, you know that I am a huge advocate of thought leadership platforms, whether it’s a blog, podcast, YouTube channel, etc. At some point, you may want to monetize your platform. For example, you offer a consulting program where you charge investors $10 a month to access premium content. Or you can sell an eBook.
Once you begin offering services for money on your website, you are entering a whole new realm from a legal standpoint. In order to avoid getting sued, additional steps are required.
David Chapo, who has 24 years of experience in providing legal services, specializes in Internet law. In our recent conversation, Richard explained the three clauses to include in your terms and conditions in order to eliminate 85% to 90% of the potential lawsuits against your online business.
Disclaimer: I am not a lawyer. For legal advice, please consult with an attorney. Reach out to David here and mention this blog post for a free consultation.
#1 – Choice of Forum Clause
The first clause to include in your terms and conditions is the choice of forum clause.
With the choice of forum clause, if someone were to file a lawsuit against you, you are able to select the location where the issue will be heard. “That clause simply says any and all legal disputes are going to be heard in Florida, or wherever [you are] located,” Richard said.
The great thing about the Internet is that it’s worldwide. From a legal perspective, the danger of the Internet is that it’s worldwide. Therefore, without the choice of forum clause, if you live in Florida and a someone from Seattle files a lawsuit against you, it may occur in Seattle. However, if your choice of forum clause states that all proceedings will occur in your state (Florida in this example), that individual is less likely to pursue a lawsuit since they’ll have travel to your state.
“Google uses this, Twitter, and they’re upheld about 75% of the time there’s an equity evaluation that a court will do,” Richard said. “Just having a single clause and binding users to it can often eliminate lawsuits.”
#2 – Mandatory Arbitration Clause
Based on the outcome of a 2011 case, “you can now include an arbitration clause,” Richard said. “The reason this is important is arbitrations tend to be very pro-business. They are not decided by juries. They are decided by retired judges or attorneys, so technical arguments are the defenses that business make – and this would be true in real estate – are received better. They’re more persuasive and can lead to better results.”
With this clause, consumers cannot take you to actual court. Instead, it goes to arbitration, which as Richard said, are much more business friendly.
#3 – Class Action Waiver Clause
Most transactions online are fairly small. You are charging tens or hundreds of dollars a month for consulting, you are selling a $9.99 eBook, etc. Since the dollar values are so small, most people aren’t going to sue you. However, the way to get around this “problem” is through a class action lawsuit. “Instead of just one person filing … an individual lawsuit, they’re all grouped together, so you end up with what’s called a class,” Richard said. “With terms and conditions now, you can include a class action waiver clause, which says … that you can’t pursue a class action lawsuit.”
This clause will likely not apply to many of you because Richard said that the minimum amount of people in a class has to be 5,000 people. Unless you have a huge consulting business, sell thousands of books, etc., this won’t affect you. But, might as well include it just in case.
Check the Box Clause
In order for all three of these clauses, as well as your entire terms and conditions, to be enforced, you must have your customers agree via a signature or a checkbox. Richard said, “that check the box provision is really essentially a signature from the user, saying ‘Okay, I’ve read this.’ Realistically, they haven’t read it still, but they know that it’s there and they know they’re agreeing. So if [you] are using a site where they’re causing somebody to do something, be it a purchase, be it joining a membership for advice or something of the sort where the user has to take an affirmative action, you want to use that [check the box] clause.”
Conclusion
Based on my conversation with Internet attorney David Chapo, there are three clauses to include in your terms and conditions in order to avoid 85% to 90% of potential lawsuits.
- Choice of Forum Clause: you chose the location of where potential lawsuits will be heard
- Mandatory Arbitration Clause: users cannot take you to court. Instead, any lawsuit will be through an arbitration
- Class Action Waiver Clause: a group or class cannot pursue a class action lawsuit against you
For these clauses to apply, you must have users “check the box” to agree to your terms and conditions.
Again, I am not a lawyer so before doing anything, consult with an Internet attorney like David.
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