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I created a web application where users can create content online. The data that they created is stored in an online database and others can see it with the link to their content online. I want to create a Terms of Service and Privacy Policy, but my options are limited.

I can either copy some online free generator for these documents or I can write my own. If I write my own, I won't get into the exact legal ins and outs of everything. If I use a free generator, a lot of the text won't even apply to my app and some of it might be contradicting features of it.

Can I just write some disclaimer that says how the data is processed and a few site rules or would this be problematic?

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You "can" do it any way you want, it's just that there are certain risks associated with option 1 vs 2 vs 3 or 4. Generally speaking, the lowest risk is associated with hiring a lawyer to discuss your requirements and write the necessary documents. It's possible that the most risky approach is writing your own documents, depending on how much legal knowledge you have and also what laws you are concerned with.

You might try saying "I'm not liable for anything", but that doesn't make you not liable. Not all liability is waivable and there can be special requirements for waiving liability ("prominent notice", which means what? in this jurisdiction). You can write rules, but they aren't necessarily enforceable. A type of situation that you don't want to get yourself into is where you boot a user for what you consider to be an offense, but in booting the user it turns out that you have breached your contract with him (you figure this out when he successfully sues you). A lawyer will (or should) know that a certain kind of clause is illegal, and a legal-language generating program may simply have systematized the legal knowledge of actual lawyers, so the program won't offer you an illegal clause (if it's a good program).

So anything short of hiring a lawyer who is competent in the relevant areas increases your risk, and the conclusion that "I can't afford a lawyer" has to be weighed against "I can't afford a $10,000 judgment against me".

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It is not required that a web site or app have a ToS document at all. If it does, there is no requirement that it use legal terminology. A ToS is where the site operator or app maintainer defines the policies that will be used, and spells out rules that users must follow. In some cases it will be a legally binding contract between the operator and the users, and users are often required to agree to it before entering the site or signing up for an app or service, or creating an account.

The answer by user6726 (which is quite good) discussed situations when an operator might want to remove and block a user. By default, a site or app operator can block any user for any reason allowed by law. But when users have a contract granting them access, and particularly when users have paid for access for a specific period, the contract (which generally means the ToS) needs to specify the reasons or circumstances when a user can be removed or an account can be cancelled.

The good reason for using legalese is because it is language that has been tested in previous legal cases, and it is easier to predict how a court will treat it. It should be clear and specific. (A bad but common reason for using legalese is because "everyone does it" and it may impress users and be unclear to them.)

Ideally a ToS document should be clear to users, letting them know just what is offered tom them and what is expected of them. It should also be clear to any court that may be involved if a dispute ever gets as far as a lawsuit.

A lawyer who has knowledge of the relevant specialties can choose language that will serve these purposes, and cover remote as well as likely contingencies. Such a lawyer can also choose terms and phrases that have been tested ion court before, and whops meaning in legal terms is clear.

A good generator program can incorporate the knowledge of one or or such lawyers, also producing clear and tested language. In either case a well-drafted ToS will increase the predictability of the outcome of any dispute, and thus reduce the risk of a suit being brought, and the risk of losing if a suit is brought.

A ToS drafted by the developer or operator may be clear, but may not use language tested in court, and may not deal with situations that the author has not thought of, even though they have occurred before and need to be addressed. Thus it may increase the legal risk toi the operator.

There is nothing magic about legalese. Often the best legal documents use relatively little of it. But it can be very valuable to know what terms and phrases have been tested in court, and what effect has been given to them in the past. It can also be very helpful to be aware of situations that have come up in the past, or that might come up under current law. A lawyer with good IP and IT knowledge may be aware of many such situations. A well-written generator program should incorporate such knowledge. A poor lawyer or a poorly-written generator may create a ToS document that is worse than the developer would do on his or her own.

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