Starting a web-based service

With a web-based service customers store data on your server, they use your software to manage their data. Things can go wrong. So what’s best? Are you even likely to be sued or have a legal issue with a customer of a web-based service?

With a web-based service that you charge customers a monthly fee what sort of legal protection do you need?

Terms of Use?
License Agreement?
Privacy Policy?

The more mission critical, the more customers will expect [and potentially come back to you for compensation over] limited downtime but these days any site can find its self out of the spotlight and gone just because of a short outage.

It’s not just a matter of protecting yourself, you need to be able to sell your ability to perform to get business in the first place. People have many, many options in and out of the cloud and reliability is among the top factors that make a sale, or break a reputation.

Having an agreement for your services, terms of service for using the site, and privacy policy are all essential. For consumer services, short of a hack, your issue is likely to be less about financial charges and more immediate and widespread negative stigmas around your brand that can, and have, destroyed startups. Downtime hurts.

That said, no document insures you won’t ending up in court if you lose someone’s data or disrupt their service. Even if you ultimately win, there’s a cost of fighting the battle to consider so pursuing insurance and of course investing in a more robust solution is definitely important. When you’re new you want to be great but don’t be afraid to set expectations too… you’re not going to offer “five-nines” reliability on day one, so say that.

Consult an attorney and have them develop an SLA for you that you will feel comfortable with. Then, consult an insurance agent and look into insuring yourself based on the risk associated with failing to meet your own SLA.

37signals just have some security information and a [URL=“”]privacy policy.

They have a standard tech Terms of Use with the classic line “Your use of the Service is at your sole risk. The service is provided on an ‘as is’ and ‘as available’ basis.” but do these stand up in the courts?