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I own a small business IT consulting firm, and on the web site we have our ToS listed. In our ToS is the following line:

[Business Name], or anyone working at the request of [Business Name], may not be held responsible for errors and omissions. This includes but is not limited to security lapses, data loss, and all general service interruptions.

Is there a prayer in heck of this actually having any affect in real life? And no, the client doesn't sign anything, this is just in our ToS on our web site.

(I am planning to get a lawyer to write up a real, and official "contract" customers have to sign, but I don't have the money for that right now.)

ETA: And no, I have no liability insurance yet, and I operate as a sole proprietor... But hey, what's life without a little risk?

ETA: I always forget to mention my location: Austin, TX, USA.

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3 Answers

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It comes down to jurisdiction, precedent, and fault.

There are some cases in which liability was waived and upheld in court. There are also some cases where it was not upheld. It depends who is at fault, how much at fault (the courts determine a percentage of fault for each party), and if there was any negligence on your part.

Having something in your Terms of Service doesn't mean you can't be sued for it. That being said, 97% of court cases are settled out of court or dismissed without a trial.

I'd be more worried about getting customers first. You're unlikely to be sued unless you have a profitable business.

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up vote 1 down vote

You own a small business IT consulting firm. I assume this means that before you do business with anyone you sign a contract with them. If this is the case, then that contract controls and any ToS is more or less meaningless.

A ToS is useful when you have users or customers that you don't sign contracts with. For example, Google search is subject to a ToS because anyone can use it and Google doesn't sign a contract with each user. If you do have something like this, then a ToS is useful.

The quoted paragraph from your ToS is unusual. I'm an attorney who writes contracts and ToS's and I've never seen anything like that. I think it is likely not helpful because it isn't clear what it means.

Your ToS should disclaim warranties and have a clause that limits liability among other things. Find other companies who do similar things as you and cobble together your own ToS as best you can by adapting the parts that are most relevant to your own business.

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As I said in my OP, I don't use contracts yet... – Kevin Soviero Oct 30 '11 at 17:03
@Kevin, sorry, missed that. You really need to get a contract in place ASAP. I suggest spending a couple hours writing something up by looking at examples you find with Google. Even a bad contract is much better than nothing at all. – Kekito Oct 30 '11 at 18:29
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It is worth nothing. Unless you are explicit and have it sign the customer, you are still liable for losses you cause at will or through gross neglect, like ignoring common IT business practices. Like if you loose data and have no backup.... the customer may ask demand because gues what - backups are standard business practice.

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Well, obviously they will have backups (assuming the customer wants it). Let's say that the backups stop working for whatever reason, would I be held liable for that, if a disaster strikes? – Kevin Soviero Oct 29 '11 at 18:39
Laws vary by location, both on a country level and a state level, so that fact that you're giving him legal advice that roughly translates to, "In every jurisdiction in the world you must have the customer sign a contract for it to be valid." you don't even know what country the poster is located in. Courts in many jurisdictions have upheld liability waivers and terms of service, without a signature. – Jason Colantuoni Oct 29 '11 at 19:06
I am from Austin, TX, USA if that helps... – Kevin Soviero Oct 30 '11 at 2:03
Yes, but not necessarily without knowing. US is a funny place - I would say it is not valid UNLESS you want to spend tons of money defending ;) Everyone can sue you anyway for anything. – NetTecture Oct 30 '11 at 10:26

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