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Terms of service perform two essential functions. The first is to educate your customers on the rules of using your products and services. The second is to protect your company from lawsuits . The TOS is a simple enough document to draw up, whether you’re using a free terms of service generator or working from a sample. Terms of service should be one of the first documents issued to your clients, and you should be sure to get it read and signed by each client before proceeding with their business.

Part One – Language

A TOS starts off by familiarizing the reader with the terms that will be used throughout the document. Generally these terms are fairly, well, general ones, such as “Terms,” “Services,” “The Company,” etc.

Part Two – Rules of the Road.

The TOS then goes on to outline the rights and responsibilities of the user. The key to this section is to keep it short and sweet while including all relevant detail. The best approach is to tell your client what they can’t do rather than what they can do. Omission is more illustrative than inclusion. Plus, it’s a good idea to keep the TOS as short as possible so people actually them.

Part Three – What Is and Is Not Your Company’s Fault

Limit your liabilities. Limit them as much as you can, and make their limits clear. For example:

TO THE MAXIMUM EXTENT PERMITTED BY LAW, ARTHURMACARTHUR, INC. SHALL NOT BE LIABLE FOR AN YDIRECT, INDIRECT, INCIDENTAL, CONSEQUENTIAL, OR SPECIAL DAMAGES OR LOSSES, WHETHER TANGIBLE OR INTANGIBLE, RESULTING FROM AUTHORIZED OR UNAUTHORIZED USE OF OR ACCESS TO OUR PRODUCTS

You also might want to include a disclaimer or return policy, particularly if you’re in the retail business. This protects you from customers blaming you for damaged goods:

SUPERDUPER, INC. IS NOT RESPONSIBLE FOR THE CONDITIONS OF ITS MERCHANDISE. THE COMPANY SELLS ALL ITS MERCHANDISE ON AN “AS IS” BASIS AND ASSUMES NO LIABILITY OR RESPONSIBILITY FOR ANY DAMAGES INCURRED IN THE TRANSFER OR USE OF OUR PRODUCTS BY YOU OR ANY THIRD PARTY.

Part Four – Verification

Put a statement at the end like, “I have read and agreed to abide by PenDragonPencil’s Terms of Service.” If you’re issuing a paper TOS, follow this with a place for the user to print his or her name and sign and date the form provide instructions as to how the document should be returned to the company. If your TOS is online, you can just have the user insert his or her initials and hit the “I Agree” button.