If this happens to you, you should consult an attorney before making any payment to see if there are any defenses available to you.
Generally, the main thing that courts consider when determining whether a TOU is valid and enforceable is evidence that the user actually “assented” to abide by the terms of the agreement. That is, you must show that the user read and understood the terms and voluntarily agreed to abide by them. Additionally, “conspicuous” or obvious notice of the agreement’s existence prior to the user accessing your product or service is very important.
Here are a few guidelines to ensure that your agreement is enforceable if ever called in to question in court.
- Match your agreement to your business. The value of each sale or service should be considered in light of how big of an effect a breach of the agreement would have on your business. For example, a simple “I agree” may be sufficient assent by a consumer, but if you are dealing with another business, it might be worthwhile to require more evidence of “assent,” such as an initial on each page or requiring the user to write out the full name of the business after reviewing the document.
- Keep track of updates to your TOU. If you update your TOU, make sure you note the date of the change and what changes were made, so that you know what version was in place at any given time. If you are changing key terms, keep in mind that a large prior customer base may not be subject to them, so you should advise them of the update and, of course, require a new consent.
- Consider re-confirmation of assent at various times. It may be wise to consider sending out the TOU to major customers at regular intervals and requiring them to acknowledge ongoing consent of the terms. While this seems burdensome, it can protect your business in the long run.
- Traditional contracts concepts still apply. Even if your TOU follows all of the foregoing guidelines, if it violates traditional rules of contract it may still be unenforceable. Again, the importance of having your attorney draft the TOU is key.
- Users should be given the opportunity to reject the agreement. This seems obvious, but if the users’ only option is to select “I agree,” this will weigh against your argument that the user voluntarily consented to the terms.
- Consider how your Agreement is affected by other third parties contracts that you have — for example, credit card processors may not recognize the validity of TOUs or the agreement may otherwise conflict with yours.
This post does not constitute legal advice and is intended to act only as a guideline on the foregoing topic. You should always consult an attorney regarding any legal issue that might affect your rights, and you should research your attorney’s background and credentials before hiring them.
© Junilla Sledziewski, 2014
Deciding on a legal structure for your business is a critical first step. Here are the most common structures and some details about each to help you decide.
1. Sole Proprietorship:
A sole proprietorship is, essentially, a one-person operation without any formal structure. You may have a sole proprietorship without even knowing it. For example, if you are a musician that plays gigs on the weekends or a nature photographer that sells your photos at local festivals you are likely considered a sole proprietor. However, you are not exempt from carrying the necessary local business licenses or paying taxes on your income. You are also personally responsible for paying any debts of the business. For example, if you were to lose a lawsuit or fail to pay a vendor, that person could come after your home, your car, and your valuables. Finally, if you operate under a name like “Bob’s Band” you must register the name of your business with the state.
2. Limited Liability Company (“LLC”):
A LLC offers protection for your personal assets because it shields you from personal liability for business debts. However, there are certain formalities that you must comply with, so speak with an attorney about how to make sure you are protected. Also, not all liability can be avoided with a LLC – for example, if you personally injury someone or personally guarantee a bank loan, you are still personally liable. Your taxes are reported just like they are for a sole proprietorship (but you can make different elections). Running a LLC is easy and does not have many of the formalities that operating a corporation requires. LLCs are a great option for small, family operated businesses or partners.
Some people just cannot resist putting their hands in the proverbial company cookie jar. Read on for tips for what to do if you have concerns that your business parter is stealing money or goods from your business, or using them for his or her personal use.
First, you must act quickly and carefully to protect your interest and to keep yourself out of hot water. The first thing you should do is locate a copy of your operating agreement, partnership agreement, or bylaws. If you never got around to reducing your agreement to writing, perhaps now you are realizing why that step is so important. Even if you do not have a formal agreement, gather any emails, letters, napkin writings, whatever, that will be helpful to prove the agreement with your partner. If you do not have any formal agreement, Florida’s “default” LLC rules will apply to you.
Next, read the agreement (and consult an attorney) to see what it says about obtaining books and records of the organization. Many business agreements contain detailed information about when and how the partners or members are allowed to review the books and records. You still need to comply with “the rules” of your agreement during the time you are investigating your partner, but that doesn’t mean you can’t use all options available to you to obtain the information that you need. For example, review (and print or save) the bank accounts of the company directly (if you have that access — as a partner or managing member, you should), talk to loan officers that work with your company, or even speak with vendors or employees of the company if you think it may be done appropriately. Also consider whether company records on the cloud or at remote locations might be easily corrupted or deleted without your knowledge.
Every Friday, I ask my Twitter followers to submit a legal question to be answered anonymously the following week. Here is last week’s question:
I just filed a single-member LLC for my flower business. Do I really need an operating agreement if it is just me running the business?
The answer: Yes, you should have one. It sounds crazy, since you have no one to agree – or disagree- with but yourself. However, an operating agreement is an important document that confirms the limited liability status of your business. It clarifies the status of your business as separate from you personally — do not be fooled into thinking that simply filing an LLC and going about your day is enough.
Why should you care and why spend the money for this simple document? Well, if you do not maintain your “corporate personhood” as separate from you personally, you might expose your personal assets to collection from your business creditors. A sharp lawyer on the other side will try to convince a court that you are running the business personally and should be made to pay the debts of your business from your personal assets. This is called “piercing the veil.”
A court will look at many factors to determine whether you were actually operating a legitimate business, and things like maintaining separate bank accounts, using your corporate name in all transactions, and having an operating agreement will be crucial for maintaining your limited liability status. These things may seem like silly “legal” distinctions, but under state and federal law those minor factors can carry big weight. You have an LLC — now use it for the purpose it was created — limiting your liability.
An operating agreement for a single member LLC must contain certain provisions that are more important for its purposes than a multi-member LLC. Consult with an attorney to make sure you have all of your bases covered.
—- by guest author Melody Cobbe @CobbeLaw
The business communities, including small businesses, are always looking for methods to become more efficient and as result, increase their profitability margins. “Outsourcing” is a creative option available to small business owners. Whether the goal is to remain self-sufficient or position your business for an eventual merger or acquisition, businesses must become smarter about where to cut costs. By “outsourcing” essential needs of your business, such as legal assistance, accounting, secretarial work, and marketing, a business owner is given the flexibility of having a job function fulfilled without the long-term cost of having an employee fill that position.
1. Disclaimer/Limitation of Liability
You will want your agreement to limit your liability for the user’s use of your online product or service. Of course, you cannot simply put a provision in your TOU that limits all liability, but there are certain categories of damages that you may be able to limit by contract. Consult an attorney for more detailed information.
You make certain promises about your product or service to your customers. That is good and sensible business practice. There are also certain warranties provided for by law. However, there are certain limitations you may want to place on those warranties through your TOU and you should do so to the extent permitted by law. These must be clear and conspicuous to your customers, so consult an attorney to draft them for you.