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Thank you for your question. Your terms and conditions aren’t binding on a third party copyright owner so they are irrelevant. You have technically breached a copyright by permitting someone to upload copyright material. If you end up out of pocket because of this you would have a right of relief against the person who uploaded the material both under common law and under contract law by virtue of your terms and conditions. However, the way to deal with this at the moment is simply to remove the offending material. Confirm you have done so and if you can provide the details of the person who uploaded the material. Do not make any offer to pay money. Rarely will they pursue the host provider under these circumstances. I hope that gives you a way forward. Happy to discuss further. Please leave a positive rating so that JustAnswer credits me for my time.
“We have taken legal advice on the terms of your communication. As we offer a free service to bloggers we cannot check each individual image for copyright issues. However we do ensure that images are removed when notice is given to us by or on behalf of a copyright owner in addition to which our terms and conditions advise bloggers on what is expected of them. This image was removed from the public domain some time ago and has now been removed from our system completely. Please therefore note the position.”