For a website owner's ToS to shield him/her from liability, does it have to be written in terms of a proper legal entity, like an LLC?

Question

Suppose Bob and Terry Jones own the domain example.org, and are going to start a website called ExamplePedia. It will be a lot like Wikipedia: a non-profit, web 2.0 site, hosting collaboratively edited informational content, for the public good.

Since the Wikimedia ToS is available under cc-by-sa, it makes sense for Bob and Terry to copy it and make appropriate substitutions. But how?

Wikimedia's ToS explains that

"we" or "us" will refer to the Wikimedia Foundation, Inc.

What do Bob and Terry put here? It seems like there are a few options:

(1) "we" or "us" will refer to Bob and Terry Jones

(2) "we" or "us" will refer to example.org

(3) "we" or "us" will refer to ExamplePedia

Or maybe Bob and Terry should form a proper legal entity, like ExampleWorks, LLC, and use

(4) "we" or "us" will refer to ExampleWorks, LLC

Now suppose something posted on ExamplePedia infringed copyright and the copyright owner wanted to sue.

Would (1) would leave Bob and Terry personally liable, even though the ToS clearly states that they only host the content, and the users are responsible for it?

Options (2) and (3) sound nice, but are they in any way legitimate? Surely example.org and ExamplePedia don't become real legal entities, just because Bob and Terry own the domain name, and call their website a certain thing...or do they?

Is (4) the only way to actually limit liability?

Answer 1

Liability of a Person

LLC means "Limited Liability Company"; in the absence of such an entity (or equivalent) there is no "Limited Liability". A partnership, which is what you are describing, or an individual has unlimited liability.

What this means is:

• An individual (operating alone or as a member of a partnership) is liable for their actions. They are responsible for the debts the business incurs (including those arising from legal liability) and must pay for them from their personal assets.

• A company is liable for its actions, however, the members of that company are liable only to the extent of the money that they have invested.

Contractual protection

A person (which includes individuals and companies) can attempt to limit liability by contract, however, there are limitations to this:

• Your liability is only limited against people who are bound by the contract; third parties (like an aggrieved copyright holder) are not
• Most jurisdictions restrict limits to liability that can be made in consumer contracts and some B2B arrangements
• You can't contract outside the law: if the law says you are liable then your contract that says otherwise is not worth a pinch of s***.

You are only liable for what you are liable for

To have a liability, you have to have done (or not done) something that created a liability under statute, tort or contract. There are legal means in many jurisdictions that protect content hosts from copyright claims: but you have to do what the law says you have to do to avail yourself of them.

"we" or "us" will refer to ...

... has to be the person(s) that are running the business - if that is Bob and Terry Jones then that's what you write, if it is ExampleWorks LLC, write that. It cant be "example.org" because that is a domain name; not a legal person. It can't be "ExamplePedia" because wtf is that anyway?

Get real advice

You are running a business and exposing yourselves to liabilities and losses that you know about and probably a bunch that you don't know about. When you learnt to drive a car, or ski, or play soccer you got instruction from people who knew how to do what you wanted to do: running a business is exactly the same: get proper advice from people who know what they're taking about and pay for it if you have to.