How important is it to have governing law and jurisdiction clauses in a TOS or Privacy Policy?

[supersmallbiz]

I think this this applies to all states.

I'm trying to get a handle on the importance on having a governing law and jurisdiction clause in a website TOS, Privacy Policy and/or Disclaimer. I've been looking at a lot of them and some have a governing law clause and others do not. I think I have a handle on what it means. It specifies which laws and courts will be used in a dispute. I've also researched what it means not to have one. Jurisdiction falls into where the parties are. The way that courts work in the US, it's hard to sue someone living in Wyoming in a Florida court. So without a governing law and jurisdiction clause, doesn't it default to the laws and courts of the party being sued anyways? So having a governing law clauses would really only be useful if for some reason someone living in Wyoming wants to use the laws and courts of Nebraska. I do realize they have to have some reason to use those courts. They just can't pick Nebraska at random. They have to have some tie into the state of Nebraska even if they aren't located there. Like they do a lot of business there or they have warehouses there.

I know nothing about the law. Is this about right overall? Without a clause it defaults to the location and laws of the party being sued. A clause allows that default to be overriden.

 

[Zigner]

You would be wise to have an attorney review your TOS, Privacy Policy, and Disclaimers

 

[quincy]

I think this this applies to all states.

I'm trying to get a handle on the importance on having a governing law and jurisdiction clause in a website TOS, Privacy Policy and/or Disclaimer. I've been looking at a lot of them and some have a governing law clause and others do not. I think I have a handle on what it means. It specifies which laws and courts will be used in a dispute. I've also researched what it means not to have one. Jurisdiction falls into where the parties are. The way that courts work in the US, it's hard to sue someone living in Wyoming in a Florida court. So without a governing law and jurisdiction clause, doesn't it default to the laws and courts of the party being sued anyways? So having a governing law clauses would really only be useful if for some reason someone living in Wyoming wants to use the laws and courts of Nebraska. I do realize they have to have some reason to use those courts. They just can't pick Nebraska at random. They have to have some tie into the state of Nebraska even if they aren't located there. Like they do a lot of business there or they have warehouses there.

I know nothing about the law. Is this about right overall? Without a clause it defaults to the location and laws of the party being sued. A clause allows that default to be overriden.

The importance of notices on a website varies with the type of website.

Your understanding of the differences between jurisdiction and governing law is not too far off base but it is not entirely correct.

For instance, with no governing law clause, there is no "default" to the state or laws of a defendant. Sometimes a suit is filed in the state where the plaintiff lives and sometimes a suit is filed where the defendant lives and sometimes a suit is filed in the state where the cause of action arose, which can be a state different from the state of residence of either of the parties. Facts will always matter.

Governing law clauses are often found when there is interaction between many states (or countries). It helps to have everyone know upon what laws decisions will be made.

I agree with Zigner that you would be smart to have a lawyer in your area help you draft the legal notices for your website. The terms of service, the privacy policy and the disclaimer cannot prevent you from being sued but carefully drafted notices can work as a defense in a lawsuit and can help mitigate damages in the event of a lawsuit loss.

You would also be wise to have insurance coverage enough to cover costs should you be sued despite your best efforts to avoid a lawsuit.

Good luck with your website.

 

[supersmallbiz]

You would also be wise to have insurance coverage enough to cover costs should you be sued despite your best efforts to avoid a lawsuit.

Would you happen to know of any insurance companies that insure websites? I've spoken to quite a few and I haven't been able to find one that will. I've had independent agents say that they can provide it but when I try to confirm eligibility with the underwriters of the policies, they say they do not cover websites unless they are tied to a physical business. In that case they are insuring the physical business and the websites are just considered a part of that.

I've even been sent in a loop. I spoke to an insurance company that said they don't offer coverage. They referred me to a specialist independent agent who they said could provide coverage. That independent agent offered to sell me a policy from the same insurance company that said they didn't offer coverage. I called back the insurance company referring to the proposed policy the independent agent they referred me to offered. They said they would not honor the policy.

 

[quincy]

Would you happen to know of any insurance companies that insure websites? I've spoken to quite a few and I haven't been able to find one that will. I've had independent agents say that they can provide it but when I try to confirm eligibility with the underwriters of the policies, they say they do not cover websites unless they are tied to a physical business. In that case they are insuring the physical business and the websites are just considered a part of that.

I've even been sent in a loop. I spoke to an insurance company that said they don't offer coverage. They referred me to a specialist independent agent who they said could provide coverage. That independent agent offered to sell me a policy from the same insurance company that said they didn't offer coverage. I called back the insurance company referring to the proposed policy the independent agent they referred me to offered. They said they would not honor the policy.

There are several insurance companies now that offer insurance coverage for online businesses. I am sort of surprised by the reaction you are receiving from the agencies you have contacted.

What sort of insurance coverage you need will depend on your business (what you offer). I suggest that you continue to call different agencies to ask about their insurance for website and/or online businesses (e.g., errors and omissions insurance, data breach insurance, general liability and cyber liability insurance ...).

Good luck.

 

[Zigner]

In that case they are insuring the physical business and the websites are just considered a part of that.

No, they're insuring the business. You have to be a business, even if a sole proprietor, in order to obtain business insurance.

 

[quincy]

supersmallbiz, your website was developed for what purpose?

 

[justalayman]

On another forum he stated it is a blog of some sort.

 

[quincy]

On another forum he stated it is a blog of some sort.

Ah. Then he will want insurance in case he is sued for copyright infringement, trademark infringement, trade secret disclosure, defamation, invasion of privacy/false light, invasion of privacy/publication of private facts, invasion of privacy/intrusion into seclusion, invasion of privacy/publicity rights ... the list continues.

What sort of legal notices are smart to have for the website depends not only on the content created by supersmallbiz but on whether others will be contributing content and/or commenting on what is posted. If registration is required, it will depend on what information is collected on the ones registering.

Supersmallbiz really should discuss his website plans - and legal notice and insurance needs - with an attorney in his area well-versed in internet laws.

 

[supersmallbiz]

There are several insurance companies now that offer insurance coverage for online businesses. I am sort of surprised by the reaction you are receiving from the agencies you have contacted.

Can you suggest some? I've tried all the agencies I can find. Any help would be appreciated. PM me if you don't want to name them in an open forum.

 

[supersmallbiz]

No, they're insuring the business. You have to be a business, even if a sole proprietor, in order to obtain business insurance.

Yes, that's why I said physical business. Every insurance company I've spoken to will only insure a website that is an extension of a physical business. They will not insure a business that only has an online presence.

 

[quincy]

Can you suggest some? I've tried all the agencies I can find. Any help would be appreciated. PM me if you don't want to name them in an open forum.

I cannot provide recommendations, here or by private message. Sorry.

When you call insurance agencies, ask specifically about online business insurance (data breach insurance, general/business liability insurance, errors and omissions). A simple search of "insurance for online businesses" should turn up several different agencies that offer policies for internet businesses (businesses that are not brick-and-mortar).

You will need a physical address when you register your business with your state. This can be your home address.