There are seven essential concepts which must be addressed in effective website Terms of Use or Terms of Service (TOS):  (1) permitted use – that is, the specific uses to which the website may be put and any restrictions on use imposed by the website operator; (2) the treatment of user-created content; (3) a disclaimer of warranties; (4) the limitation, in whole or in part, of the website operator’s liability; (5) a privacy policy; (6) governing law and choice of forum; and (7) how the Terms of Use may be modified.  In earlier posts in this series, we discussed the first five of these elements; the next element is:

6.  Governing Law and Choice of Forum.  A website’s Terms of Use should indicate which state’s laws govern the interpretation and enforcement of the agreement and where disputes between the website operator and user will be adjudicated.  Generally speaking, a website’s Terms of Use will apply the law of:  (1) a jurisdiction whose laws are favorable to the website operator; (2) the jurisdiction in which the operator is physically located; or (3) the jurisdiction whose laws are most familiar to the attorney who drafted the Terms of Use.  Often, the Terms of Use will require that disputes between the parties be adjudicated in a forum convenient to the website operator so as to minimize the risk that a distant court may exercise jurisdiction over the website operator. See Jonathan D. Frieden & Sean P. Roche, E-Commerce:  Legal Issues of the Online Retailer in Virginia, 13 Rich. J. L. & Tech. 5 (2006). (“The potential for nationwide jurisdiction attendant to Internet sales is a very real threat to small online businesses who would not otherwise reach a customer base inconveniently distant from their place of business.”).