Web Hosting and Legal Issues?

What is your web hosting company's url ?

Thanks!
Danny

Justin, it is wise to consult an attorney in any business really. The Internet is a really rough place where anyone with so much as a finger can threaten to and possibly will sue you. I would highly suggest that you have an attorney go over the legalities of opening this type of business and make sure they cover your butt.

Starting a hosting company is not the easiest thing to do in the world, nor is it the safest. You will get burned and it will suck, but there will be nothing that you can do about it. It's a great business to be in (I would never quit), but it takes a lot of time, effort, and money. Make sure you have all three (and a good lawyer).

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Dynamic Internet Solutions : http://www.dids.com
Windows NT and UNIX Hosting

Justin,

You absolutely must have an attorney if you are running any type of business. And for a hosting company, you really need an attorney that is well versed in Internet law.

Where are you located? If you are in New York or Massachusetts, let me know and I can refer you over to our attorney. If you're not in New York or Massachusetts (which is where our attorney is licensed to practice), then you'll want to call your state's bar association and see if they can give you a list of attorneys specializing in Internet law.

Good luck,

Jason Ellis, CEO
Hosting Solutions, Inc.

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kindly tell me if i am wrong. If you are going to doing an online business with a Private Ltd business name, i doubt you need any lawyer.

Please forgive me being an ignorant.
Why do you need a lawyer to setup a hosting company???????? Internet Law ? Can someone tell me whats that? Unless you are going to incorporate it then you need a lawyer.

Please pardon me for being dumb! Sorry

Danny

(Not a lawyer, not a legal opinion)

Danny - LTD (aka Corp, Inc, Limited) is just the structure of the company. If you mean to do it properly you really should have the help of a lawyer to work out the incorporation.

I assume Justin means starting from the ground up a hosting company and not just be a reseller or agent for someone else (though an attorney may be useful for that too). In general you should have an attorney at the ready for any business enterprise.

I can tell you from first hand experience there are many people out there who are just chomping at the bit to get you in trouble for any of dozens of reasons. I think it's just a hobby to many.

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ArtsNFlies.com
"It's not really a flyfishing shop, more like a Martha Stewart goes fishing thing!"

Original art, hand tied flies, unique books and gifts, free sweepstakes and MORE!
Come see what everyone is talking about!

Danny,

It really doesn't matter what type of business you run - be it a web hosting company, a grocery store, an autobody shop - whatever - you should always have a lawyer at your disposal.

There are a gazillion laws and regulations that business must obey, to the letter. And it's a good idea to consult an attorney before making any sort of action that relates to the law.

We keep our lawyer on retainer and spend, oh, probably about $200 a month just on simple questions, reviewing documents, etc.

And for a hosting company, it's very important to have an attorney who is knowledgable in Internet law. By Internet law I mean any specific laws or court rulings (court rulings especially, since there aren't a lot of laws that are specific to the Internet commerce but there are many court rulings on record conserning it) that apply to doing business on the Internet.

Having an attorney that is knowledgable of the laws and regulations that apply to your specific business is absolutely vital for any company - sole proprietorship, corporation, or limited liability company alike. There are only two things that a business *must* have - a lawyer and an accountant.

Thanks,

Jason

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Yeah- I am starting a business, only doing website design and was wondering where I could start looking for lawyers that deal with Internet Law? Any help is appreciated.

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Adam Lysne
[email protected]
AOL- FibrOptikL
AIM- f i b r Md
ICQ- 49384845

Oh! Ok!!! I got it thanks for telling me this guys. I guess since i am going to sell #1 pcs online I will just have lawyer ready incase something goes wrong. Gonna take a trip to the a lawyer office tommorrow.

Cya later peopl!

Sorry- I was away for a few days since I posted...

Thanks for the advice- EVERYONE!!! Actually I have a few questions:

1) I understand that if you have your own hosting company (your own servers) then you need a lawyer. So I think I'll be making a trip to a few law offices soon. But someone mentioned if your a reseller you don't need a lawyer. Is this true?

2) What policies can you setup to protect yourself from lawsuits? Like "we do not take responsability for the content of the sites we host."? I know you can't protect yourself from people who just don't like your company, etc...

Thanks!

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Justin @ fireburn.com

Adam,

If you're in New York or Massachusetts, drop me an e-mail ([email protected]) and I'll refer you over to our lawyer.

If you're not in one of those two states, then I suggest contacting your state's bar association and asking them to provide you with a list of lawyers specializing in Internet-related law.

Good luck,

Jason

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Hi Justin,

#1: I would definitely suggest you get a lawyer regardless of what your specific business model is (reselling or full hosting, etc.) Even as a reseller, you are a business - you need to make certain you cover yourself.

One very good thing to do is to establish your company as either a corporation or a limited liability company (LLC). Although it'll cost you a bit of money (probably about $1000 to $1500) to have your lawyer do all the paperwork for that, it is a very important step.

The reason being is that as a sole proprietorship, you are personally responsible for whatever your business does. So that if you get sued, and you lose, you are personally responsible for paying for the damages awarded by the courts.

I have known several sole proprietors that ended up losing their homes, cars, and other possessions because they lost a lawsuit. Your wages can be garnished for years to come until you've paid off the award from the courts.

On the other hand, if your business is a corporation or an LLC, you personally have very limited liability for the actions of the business (you're not totally obsolved of responsibility, but you are mostly in the clear). That means that you wouldn't personally have to pay if the business lost a law suit (note that I am Not a Lawyer, so don't take my ramblings as 100% accurate - your lawyer can give you much more detailed descriptions of what you are and are not safe from). And a corp or LLC can declare bankruptcy and fold with far less personal impact than a sole proprietorship.

Bottom line, if you're going to be in business, get yourself a good lawyer. And, honestly, a really good insurance policy (both personal and professional liability insurance) is also a very important item.

#2: You should absolutely have a Terms of Service agreement. Your TOS needs to be cleared by your lawyer (you don't necessarily want your lawyer to write the entire TOS, as that'll cost you a fortune. I recommend that you write it based on the TOS's you find for other hosting companies, and then let your lawyer "legalize" your rough draft).

But, as Jaiem pointed out, having a good TOS will help protect you from loosing a lawsuit - but it will absolutely not protect you from having someone file a lawsuit against you. Nothing can protect you from that. And that's why it's important to have insurance - your insurance should cover the cost of defending yourself from a lawsuit (providing you have adequate professional liability insurance. Which, I hate to admit, may be very difficult since most insurance companies do not want to provide professional liability insurance to companies in our industry. And a professional liability rider is very expensive if it's not covered in your base insurance package.)

Bottom line is, nothing can keep you from being sued, but a good lawyer can keep you from losing the lawsuits and making certain that everything you have is legal.

Good luck,

Jason

[This message has been edited by Jason Ellis (edited 24 January 2000).]

Justin - You can set up any policy you'd like and still get sued! A policy is just a defense, not a shield. These days anyone can sue for anything anytime. And even if you aren't sued there are dozens of self-appointed, self-righteous watch-dog groups who would just love to record you as having violated (in their opinion) some code of conduct or ethic.

A brief lesson in life:

(I don't mean to sound like I'm preaching but I know there are many young people here who might not have fully realized these things yet)

The business world is not a friendly place. It's not the "we're all in it together" world your teachers usually try to portray in business/economics class. It doesn't matter if you're selling hosting services, web design, used tires or oatmeal. When money is involved people will say and do things they would never otherwise do or care about. IOW, someone somewhere isn't going to like that you're in business and may try to put you out of business by any number of ways, legal or illegal, open or deceitful. It may be a competitor (especially a competitor!). It may be someone who wishes they had thought of it first. It maybe someone who doesn't like people named "Joe" or "Mary" or people that live in your town - whatever. Just be ready for anything no matter how dumb.

(sorry for the preaching)

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ArtsNFlies.com
"It's not really a flyfishing shop, more like a Martha Stewart goes fishing thing!"

Original art, hand tied flies, unique books and gifts, free sweepstakes and MORE!
Come see what everyone is talking about!

Jaiem:

So what you're saying is that if I drive a car that exploded because of a defected fuel tank, I shouldn't be able to sue the car company?

The only way to protect the little people is lawsuits. Lawsuites has made car a lot more safer. It prevent companies from cutting cornors.

Look at CIHost and Truehosting. Both hosting company screw their customers. CIHost was down for over three weeks. A lot of E commerce website lost customers when CIHost was/is down. IMHO, it is good to see some lawsuites against hosting companies that has been ripping off customers for the past years.

What the internet need more then ever is the self-righteous watch-dog groups. The more the better.

Thanks everyone! You have sucessfuly scared me out of the hosting business Haha...

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Justin S.

I find hosting a pain, especially if your a reseller...that's just me.

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Adam Lysne
[email protected]
AOL- FibrOptikL
AIM- f i b r Md
ICQ- 49384845

no one needs a lawyer, but everybody should have at least one. it does matter what a lawyer draws up for u. u can and probably will still get sued at some time or another. the question is will they win. that's were ur attorney's skill comes in, both in drafting legal documents and the court room.

good luck

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[This message has been edited by fairhousing (edited 25 January 2000).]

Adam - In what ways is it a "pain"?

I've thought about being a reseller and just wondering what the "dark side" is.

Thanks.

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ArtsNFlies.com
"It's not really a flyfishing shop, more like a Martha Stewart goes fishing thing!"

Original art, hand tied flies, unique books and gifts, free sweepstakes and MORE!
Come see what everyone is talking about!

[This message has been edited by Jaiem (edited 25 January 2000).]

Jaiem:

I was planning to start my own hosting company. Then I realized the costs. It can cost upwards of $500+ or more. Also, I found it to be a pain, when I did host a couple of sites, due to tech support related issues. Also, it can become time consuming, and the profits are small, unless you have a large number of customers. If you can start it out correctly, and do it right, that's good. If you have the money, and can afford to loose it, if the company or business does not work out. Either way, I say you need to think of what you are going to do, and if you can accomplish it. There are many more things involved rather than just getting a reseller account, and a website. You need legal stuff, and a lawyer (recommended), also many other hassles. I find it busy for me right now, considering I do not have the time. Maybe in the future, I will do it "right". For now, it can be very time consuming.

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Adam Lysne
[email protected]
AOL- FibrOptikL
AIM- f i b r Md
ICQ- 49384845

[This message has been edited by Adam Lysne (edited 25 January 2000).]

Adam - I hear you.

Have you considered being an agent instead? Some hosting companies like VenerNet use sales agents instead of resellers (you can resell too if you want).

As I understand the process, you're like a broker for the hosting company. You market, answer questions, provide any other services you may want, etc. But the customer only signs up with the host through you and you get a commission. All tech support, billing etc. goes directly through the hosting company.

Curtis - Did I get it right?

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ArtsNFlies.com
"It's not really a flyfishing shop, more like a Martha Stewart goes fishing thing!"

Original art, hand tied flies, unique books and gifts, free sweepstakes and MORE!
Come see what everyone is talking about!

Jaiem: that sounds correct.

Ok- I get the point that I need a lawyer, but what have you actually seen? Anything? Nothing? Something? Give me some examples please...

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Justin S.

Justin - I assume you're refering to examples of why you might need a lawyer. Here are a few I can come up with off the top of my head:

1) Suppose Joe hosts with you. Someone sends you an email claiming Joe spammed them. What do you do? Do you take the person's word for it? Or, Do you tell the person "That's between you and Joe"? If you take action, Do you drop Joe on the spot? Or, Do you let Joe tell his side? What if you drop Joe just on the accusation and Joe wants to sue you for putting him out of business?

2) Suppose Joe hosts with you and he runs a forum on his site. Someone emails you and claims something on Joe's forum is slanderous/libelous to them. What do you do? If the person files a suit against Joe I'd bet a weeks pay you get named in the suit also since you're the hosting provider.

3) Suppose Joe runs a commercial site hosted with you. Someone emails you and claims Joe frauded them somehow. If they sue for fraud wanna bet you'll be named too?!

My point is that cyberspace is different from traditional store-front space. With traditional store-front space the land lord (the person renting you the store front) doesn't get involved in the affairs of his/her tenants as long as they pay the rent and don't destory the place. Anyone having an issue or problem with the tenant and trying to talk to the land lord about it would probably get the brush off. I doubt very much if someone sued a store-front business they would name the land lord as well.

But not in cyberspace. Right or wrong, appropriate or not, the hosting company (the cyberspace "land lord") does often get involved in issues of their clients (and not just their resllers and affiliates). It seems to me that as such the hosting company shares some liability with their clients. (not a lawyer, not a legal opinion)

I'm not saying it happens all the time but it could happen, espeically if e-commerce grows as much as futurists claim it will.

(and I'm not trying to start a debate in this thread about these topics, just somethings that have occurred to me when thinking about being a host/agent/reseller)

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ArtsNFlies.com
"It's not really a flyfishing shop, more like a Martha Stewart goes fishing thing!"

Original art, hand tied flies, unique books and gifts, free sweepstakes and MORE!
Come see what everyone is talking about!

[This message has been edited by Jaiem (edited 26 January 2000).]