Key Points to Consider When Creating Terms of Use for Web Services (Part 1)

It is common for terms of use to be publicly available on web services on the internet. These terms are applied when a dispute arises between the service provider and the user. Even in similar cases, the outcome can greatly vary depending on how the terms of use are defined. In this article, we will explain how to create terms of use and points to note during creation.

Points to Consider When Creating Terms of Use

What are Terms of Use?

Terms of Use are applicable to both the providers and users of web services such as games, and they are essentially the rules of service use put into writing. They are often posted on the homepage of the service.

While Terms of Use are not exclusively used for web services, they have become almost mandatory for services provided over the internet, such as social networking services (SNS) and content download services.

Typically, the service provider creates the Terms of Use. However, when a user agrees to the Terms of Use and uses the web service, the content of the Terms of Use becomes a contract binding both parties. Furthermore, in the event of a lawsuit related to the use of the web service, the Terms of Use will serve as the basis for the court’s judgment. Therefore, careful consideration is necessary when drafting the content.

The Necessity of Terms of Use in Web Services

If there are no established terms of use for a web service, rules defined by laws such as the Japanese Civil Code will be applied. You might think that there is no need to specifically establish terms of use in this case. However, the rules under laws such as the Civil Code may not always be advantageous for your company. Therefore, it is necessary to establish your own terms of use to eliminate the risks that may arise when legal rules are applied as they are.

For example, in blog services or review sites, there may be situations where the website operating company wants to freely use the content posted by users. However, under the rules of law, the copyright of the posted content belongs to the user who posted it, and in principle, others cannot freely use it. Therefore, if there are no terms of use, the website operating company cannot freely use the user’s posts.

In such cases, by stipulating in the terms of use that the website operating company can freely use the content posted by users without charge, the website operating company will be able to use the posted content.

Points to Note When Using a Terms of Use Template

When creating terms of use, it is common to refer to the terms of use of other companies. However, as each company’s web service usually has its own uniqueness, it is meaningless unless you create content that matches the service you provide. For example, the provision of the terms of use that allows free use of user posts, as mentioned above, is unnecessary if it is not a web service that receives posts from users in the first place.

Therefore, while it is fine to refer to a terms of use template or the terms of use of other companies, it is important to carefully consider whether it matches the content of the web service your company provides and whether it can respond to the unique risks of your web service.

Furthermore, there have been cases where it was judged that copyright infringement occurred by directly using the terms of use of another company (Tokyo District Court, July 30, 2014 (Heisei 26)). Therefore, sufficient caution is necessary when referring to the terms of use of other companies.

Correct Method of Creating Terms of Use

In the following, we will explain the content of the terms of use that should be included relatively commonly regardless of the type of service the company provides.

User Agreement to the Terms of Use

In order for a web service operating company to apply the terms of use it has created to its users, it is necessary to obtain the user’s agreement to the terms of use in some form.

Common methods of obtaining consent include installing a button for agreeing to the terms of use and asking for a click, or asking for a check in a checkbox stating that the terms of use have been confirmed. However, compared to the general contract method where the parties sign and seal a contract, it is important to note that the method of concluding a contract with a click on the web has a lower certainty of confirming the person’s intention.

Therefore, you should adopt a method such as making it impossible to press the agree button unless you scroll to the end of the terms of use, and design it so that you can definitely claim that you agreed to the terms of use in case of trouble with the user.

It is also necessary to stipulate in the terms of use the conditions under which a contract based on the terms of use is established. In many cases, it is not at the time of clicking on the agreement to the terms of use, but at the time when the web service operating company approves the registration. In this case, the timeline is agreement to the terms of use by the user → registration application by the user → registration approval by the web service operating company (contract conclusion).

The reason why the contract is not established at the time of agreeing to the terms of use is that the web service operating company needs to reserve the right to refuse a contract with a problematic user.

For example, problems arise when a user who has caused problems in the past tries to register again with a different account, when a minor registers, or when a user who falls under antisocial forces registers.

Especially with regard to the registration of minor users, with the spread of smartphones to younger generations, there are increasing cases of trouble where minors make high-priced charges without the consent of their guardians when using social games, etc. The Civil Code stipulates that if a minor performs a legal act such as a contract without the consent of a guardian (accurately, a “legal representative” such as a person with parental authority or a minor guardian), the contract can be cancelled. Therefore, some web services explicitly state in their terms of use that they will not accept registration if the user has not obtained the consent of the guardian.

Provisions Regarding Changes to the Terms of Use

After the creation of the Terms of Use, if the service content changes, the business operator must predefine in the Terms of Use the method of changing the Terms of Use unilaterally.

The Terms of Use are contractual clauses applied between the business operator and the user. Therefore, if you want to change the Terms of Use, it is natural to obtain consent from the user. However, unless the change in the content of the Terms of Use significantly disadvantages the user, it can be said that users often have no interest in the change in the content of the Terms of Use. In this case, many web services do not require renewed consent to the changed Terms of Use, as it is unlikely to cause inconvenience. Therefore, it is stipulated in the Terms of Use that “the web service operator can change the Terms of Use”, and the Terms of Use are changed without obtaining individual consent from the user.

In this case, it is common to treat user consent as a formality by stipulating in the Terms of Use that “if we change these Terms, we will notify registered users of the changes, and if registered users use our service after being notified of the changes, or if they do not cancel their registration within the period specified by our company, registered users are deemed to have agreed to the changes to these Terms“.

Provisions Regarding the Definition of Terms Related to Web Services

Terms of use are created to be applied in the event of a dispute between the parties. Therefore, it is necessary to define the meanings of terms used in web services and terms of use so that they are clearly understood not only by users and operators, but also by third parties such as courts.

Therefore, it is relatively common to provide provisions regarding the definition of terms in the terms of use, so that the meanings of the terms used in the terms of use can be clearly understood from a third party’s perspective.

Provisions on Account Management

Users may believe that they are free to allow others to use their accounts at their own discretion. However, some web services may charge fees per account, and allowing account sharing could potentially lead to a decrease in revenue. Furthermore, sharing or transferring accounts can also pose a risk of causing security issues.

In addition, users may create their own accounts on some web services. In this case, there is a risk of unauthorized use of the account by someone other than the user. Therefore, it is common to stipulate that sharing or transferring accounts is prohibited and that users are responsible for properly managing their accounts. If any trouble arises due to violations of these rules, it is typically explicitly stated in the terms of use that the user will be held responsible.

Provisions on Prohibited Actions in Web Service Use

In web services, there may be users who engage in nuisance or illegal activities. If there are no pre-established provisions prohibiting such actions, it can be difficult to stop them. Therefore, it is effective for businesses to specifically enumerate and define in the terms of use any actions they consider inconvenient as prohibited actions.

Most web services generate revenue by providing the same service to a large number of users. Therefore, properly controlling user behavior that is inconvenient for the business is an important point in continuing the web service. Thus, defining prohibited actions specifically is very important when creating terms of use.

When defining prohibitions, not only general content that any business would define, such as the prohibition of infringement of third-party rights and illegal activities, but also prohibitions that could arise as unique to that service should be defined as specifically as possible. This makes it easier to take measures such as penalties against users who violate the prohibitions.

For example, if a user who has been penalized objects that the response is unfair, it is easier to settle the claim if the user’s actions clearly violate the terms of use. Therefore, it is very useful to describe as comprehensively as possible the actions that are prohibited in the terms of use. However, it is difficult to anticipate all prohibited actions at the start of the web service, so in reality, it is common to add to the prohibitions each time a specific problem arises after starting the service.

In addition, the terms of use may also stipulate penalties for engaging in prohibited actions. This is because even if prohibited actions are defined in the terms of use, they will not serve as a deterrent without penalties. Examples of penalties include stopping nuisance behavior, temporarily suspending the use of the service itself, and imposing usage suspension penalties.

For templates of terms of use, we will explain in detail in the following article.

Related article: Key Points to Consider When Creating Terms of Use for Web Services (Part 2)

Summary: Consult Lawyers in Creating Terms of Use for Web Services

The terms of use are also a contract applied between the web service operating company and the user, and agreement from both parties is necessary. Therefore, the path taken to agree to the terms of use is important, and it also helps to avoid trouble with users. Also, when creating terms of use, it is very important to avoid trouble by making the content match your own web service, even though you may think you can just use other companies’ terms of use as they are. As knowledge of IT-related laws such as copyright law is necessary for creating terms of use for web services, we recommend consulting with a lawyer who is familiar with the IT field.

Guidance on Contract Creation and Review by Our Firm

At Monolith Law Firm, as a law firm with strengths in IT, Internet, and business, we offer services such as the creation and review of various contracts, in addition to the terms of use for web services, to our advisory and client companies. If you are interested, please see the details below.

Areas of practice at Monolith Law Firm: Contract Creation and Review, etc.