“Terms of Use” to Limit Liability and Contract with Customers

Can healthcare and other startups creatively use Terms of Use to limit liability and Contract with Customers, creating clear expectations that manage their relationship with the end user? 

The Good News About Terms of Use

Hint: This is a yes/no question and the answer is “yes” (you had a 50% chance of getting it right. Read on!)

We all know that there is a lot of boilerplate in a Terms of Use and that many entrepreneurs consider this a boilerplate document.

Nonetheless, it’s critical to understand that the Terms of Use is the contract between your company and your customers.  The Terms of Use not only governs how users can (and cannot) use your website; it also describes what your website customers can expect from you, and what you can expect from your customers.

This can be especially important if you’re a healthcare startup.

For example, let’s say you’re an MSO (management services organization) that contracts with physicians for the medical doctors to provide services to patients such as:

• telemedicine / telehealth (telepsychology, teledermatology, teleradiology….)
• mobile health services
• medical marijuana recommendations
• house calls

then one important thing your Terms of Use should do, is disclaim the medical role.  More about this, below.

Some Key Provisions in your Terms of Use

Typically, the Terms of Use has a certain structure, organized by headers so the reader can follow.  For example, we start the ones we draft with preliminary matters, such as:

• Introduction – define your company, define the customer, define Website Content, and other key definition
• Acceptance – by using the website, the customer accepts the TOU
• Eligibility – define who can use the website and for what purposes
• Other general provisions – various provisions defining legal obligations
• Termination – your company can terminate for violations

Next comes the important Disclaimer section.

Disclaimer Section of Terms of Use

Use your Terms of Use to limit liability.  Disclaim specific things very strategically.

For example, as a healthcare startup:

• Disclaim the practice of medicine and assert that you’re only providing education and information online.
• Similarly, disclaim the practice of psychology (or any other relevant healthcare profession, such as chiropractic or psychology).
• Note that information about dietary supplements (if applicable) is not approved by FDA and is not intended to diagnose, treat, cure, or prevent any disease.
• Direct a user who is in acute distress to an emergency room or crisis help hotline.

Other Important Caveats

Other important caveats and disclaimers include:

• A disclaimer that you are not providing a guarantee or warranty of results
• A disclaimer with respect to services provided by third parties who may have a profile or advertising on your website
• A disclaimer of liability for negligent credentialing

Even if such language might ultimately be unsuccessful as a barrier between you and liability, it can be strategically useful, including as a deterrent.

Also, for risk management, consider:

• Limitation of liability
• An assumption of risk and indemnification
• An arbitration clause

and various other bells and whistles applicable to your situation.

Let us know if you have questions about the Terms of Use on your website or need a Terms of Use drafted for your healthcare startup or other venture.  Remember that your website makes claims about your products and services.  Although a well drafted disclaimer doesn’t repel all evil (think garlic and vampires), it can ward off many potential claims.