Terms and Conditions - American Bar Association

Some website proprietors simply post terms and conditions, generally behind a link labeled "terms and conditions" or "legal notices". They do this with the ... RenewYourABAMembership It'stimetorenewyourmembershipandkeepaccesstofreeCLE,valuablepublicationsandmore. Yourmembershiphasexpired-lastchanceforuninterruptedaccesstofreeCLEandotherbenefits. Renew Now SearchABA Skiptocontent AmericanBarAssociationTM AmericanBarAssociation MyABA Events CLE ShopABA MemberDirectory Join LogIn LogIn ShoppingCart Jointhe- ABA BusinessLaw Membership Committees More EventsandCLE Publications InitiativesandAwards AboutUs ContactUs SearchThisGroup MainMenu Search Submit Clear Close Search Submit Clear ABAGroups BusinessLawSection SafeSelling Aretermsandconditionsrequired? Websitesarenotrequiredtoposttermsandconditionsandtherearestillsomewebsitesthatdonotdoso.However,therearemandatorydisclosuresthatapplytoparticulartypeoftransactions,whetherweb-basedornot.TheUniformCommercialCodecontainsrequirementsformakingwrittendisclaimersofwarranties,andbankingandfinancialservicesregulationshavemanyspecificdisclosurerequirements. TheChildren'sOn-LinePrivacyProtectionActrequiresexplicitdisclosuresforsitescollectingpersonalinformationaboutchildrenundertheageof13.TheDigitalMillenniumCopyrightAct(the"DMCA")requiresmoredisclosures.Ifanon-lineserviceproviderwishestobenefitfromthe"safeharbor"provisionsoftheDMCAtobeprotectedfromcopyrightinfringementsuitsforcontentpostedonwebsitesthatitishosting,thenitneedstodisclosecontactinformationtoreceivenoticesfromcopyrightclaimants. Inshort,ifalawrequiresthatawrittenstatementmustbemade,thenthetermsandconditionsshouldcomply. Whatshouldbeincludedintermsandconditions? Termsandconditionsmaybeaconvenientplacetoincludewarranties,deliveryterms,andreturnpolicies,inadditiontoanylegally-requiredterms,basedonthenatureofthetransaction.Otherprovisionsoftenincludedinwebsitetermsandconditionsarelimitationsonliabilityandclausesprovidingforcertaindisputeresolutionproceduressuchasarbitrationormediationand/ordesignatingalocaleforbringingclaims. Termsandconditionscanalsocontainrestrictionsonthevisitor'suseofthewebsiteitself.Inthiscategoryareprohibitionsoncopyingdataappearingonthesite,orforbiddingtheuseofrobotsorspiders.Protectingthewebsiteproprietor'sdatabycontractualagreementisimportantbecause,intheU.S.,individualpiecesoffactualdata,(i.e.,anaddress,sportsscoreoravailableticket,)arenototherwiseprotectedagainstcopyingbytheintellectualpropertylawsevenanentiredatabasecouldhavelimitedornoprotectiondependingonhowmuchcreativeselectionorarrangementwasinvolvedincompilingit.Likewise,unauthorizedlinkingtoasiteisnotprohibitedbyotherlaw,unlessitisdoneinamannerthatconstitutescopyrightortrademarkinfringementsoatermorconditionmaybedirectedtothis. Theimpactofanamendmenttothetermsandconditionsisgreaterwhenthereareongoingservicesbeingprovided,therearerepeatcustomers(whomaynotbeinclinedtoreadthetermsandconditionseachtimetheymakeapurchase),or,thecompany'sabilitytodiscloseinformationisbeingliberalized.Sometimesacompany'sprivacypolicyissetforth,orincorporatedbyreference,inthetermsandconditions.Dependingonthefactualcircumstances,someprivacy"policies"arecontractsrequiringassent,whileotherprivacypoliciesarestyledasstatementsofpolicy.SeePrivacyPolicySectionbelow. Aremytermsandconditionsenforceable? Courtsarenowregularlyenforcingso-called"clickwrap"agreements,whereauser'sassenttothetermsandconditionspostedonawebsiteisrenderedbyclickingonabuttonthatsays"Iagree"or"yes".Whentheseagreementsareupheld,usersaredeemedboundbythetermsinthesamewaythattheywouldbeboundbyasignedcontract,whetherornottheyactuallyreadtheagreement,solongastherewasanadequateopportunitytodoso.Requiringtheusertoexpresslyagreeordisagreewiththetermsandconditionspostedonawebsitegoesalongwaytoensuringthatanenforceablecontractwascreated.Whetherpostedtermsandconditionsthatdonotrequiretheusertoclickan"Iagree"buttoncancreateanenforceablecontract.islesscertain.(See"CanIsimplyposttermsandconditions?") Yet,evenwhereanelectronicagreementrequiresexpressassent,therearestillreasonswhyacourtmaynotenforceit.Acourtwillconsiderwhetherthetermswerepresentedinawaythatprovidedreasonablenotice,i.e.,Wasthetypefacelegible?Wasthefulltextoftheagreementeasytofind?Wasthetext,eveniflarge,easytounderstand?Anotherelementofadequatenoticeiswhethertheuserwasmadereasonablyawarethatitwasagreeingtoacontract,i.e.,wasthebuttonmeanttoindicateassentdesignatedas"Iagree"or"Yes",orinanambiguousmanner,suchas"submit","continue"or"showmethelenders?" Toincreasetheprospectsofenforcement,websitetermsandconditions,likeallstandardformcontracts,shouldbedraftedinaclearmanner,withouttechnicaljargonandexcessivelegalese.Thus,careshouldbetakenthattermsandconditionsarenotundulylongbyvirtueofirrelevantclausesorextraneousboilerplate.Theyshouldalsobepresentedaslegally-bindingterms,andnotmixedwithmarketingmessages,andtheyshouldbescouredforinconsistencieswithotherstatementsmadeonthesite.Itisalsoimportantthatthesiteallowstheuseradequatetimetoreviewtoterms,bothwhenfirstpresentedwiththemandforlaterreference.(Forotherfactorsrelatingtothepresentationoftermsandconditions,see"Areelectroniccontractsenforceable?"and"CanIsimplyposttermsandconditionsonmysite?") Termsandconditionsshouldbecapableofbeingretainedbytheuserinelectronicorprintedform,iftheyarenotbeingsentdirectlytotheuserbyanothermeans,suchasbymailorfax.Someindustries,suchasfinancialservices,arerequiredtoprovidecopiesofcontractstotheuserinhard-copyform.Inaddition,astoelectronictransactionsgenerally,Section8oftheUniformElectronicTransactionsAct,adoptedinsomeforminnearlyall50states("UETA"),prohibitsawebsiteproprietorfrominhibitingauser'sabilitytostoreorprintthecontractualtermsifthepartieshaveagreedtocontractelectronicallyandthelawrequiresthattheuserbeprovidedinformationinwriting.OnemightexpectthesamerequirementinotherjurisdictionsevenwithoutUETA.UnderSection101(d)(1)(B)oftheElectronicSignaturesInGlobalandNationalCommerceAct("E-Sign")termsandconditionsmustremainavailabletotheuser,inaformcapableofreproductionforlaterreference,iftheapplicablelawrequiresthatarecordberetainedregardingthetransaction. Inordertoavoiderrorsthatresultfromtyposorimpropernavigationofthesite,theusershouldbeabletoviewandapproveanordersummaryorconfirmationscreenpriortotheplacementofanon-lineorder.Infact,UETASection10(2),givesanindividualtherighttorescindawebsitetransactionresultingfromhisorhererroriftherewasnoopportunitytocorrectit,assumingthattheindividualpromptlynotifiestheselleroftheerror,takesreasonablestepstoreturnordestroyanyproductorservicereceived,andhasnotusedanybenefitsprovided. Finally,anissuethatunderliesallstandardformconsumercontracts,whicharepresentedona"takeitorleaveitbasis,"iswhetherthetermsaresounfavorableastobeconsidered"unconscionable"and,therefore,unenforceable,regardlessofwhetherthecustomerhasmanifestedhisorherassenttothem.(See"Whatprovisionsarenotenforceable?") Whatprovisionsarenotenforceable? Asintheworldofpapercontracts,certainprovisionsintermsandconditionsmaynotbeenforceable,evenifyouhaveobtainedaclickof"Iagree".Illegalprovisions,suchasusuriousfinancecharges,arevoidasagainstpublicpolicy,nomatterhowcleartheotherparty'sconsentmaybe.Otherprovisionsmaybeconsidered"unfairtradepractices"underfederalorlocalconsumerprotectionlaws.Inadditiontobeingunenforceable,theremaybesubstantialpenaltiesassociatedwithincludingillegalorunfairtermsinaconsumercontract. Moreover,provisionsinstandardformcontractswhicharesofavorabletothevendorasto"shocktheconscience"willnotbeenforceableongroundsof"unconscionability".Anexampleofaprovisioninanelectroniccontractwhichissometimesenforced,butothertimesfoundtobeunconscionable,isonerequiringtheresolutionofrelativelysmallclaimsagainstthecompanyinalocationfarfromwheretheclaimantresides,orawaiveroftherighttobringaclassaction. Itishardtoenumerateprovisionswhichareunconscionable,sincetheoutcomeoftenturnsonthespecificfactsofthecase,theapplicablestatelaw,thesympathiesofthecourt,juryorarbitrator,andthestandardindustryviewofacustomer’sreasonableexpectations.Eveniftheonlyriskisthattheprovisionwillbestruckdown(andthatisoftennottheonlyrisk),therecanbenegativepublicityassociatedwithanychallengetothecompany'sbusinesspractices. EnforceabilityoftermsoutsidetheU.S. TermsandconditionsthatareenforceableintheUnitedStatesarenotnecessarilyenforceableoverseas.InJuneof2004,aFrenchcourtstruckdown31clausesinthestandardtermsandconditionsusedbyAOL'sFrenchsubsidiaryasviolatinglocalcontractand/orconsumeranddataprotectionlaws. ThequestionableclausesincludedthosewhicharecommoninU.S.websitetermsandconditionsandotherstandardformconsumercontracts,suchas,disclaimingliabilityforperformanceandlimitingthecustomer'sremediestoterminatingservice.Moreover,thecourtsuggestedthatconsentwasrequiredforthetransferofpersonalinformationoutsideofEuropeandtheuseofsuchinformationformarketingpurposes.Inadditiontostrikingdowntheoffendingclauses,theFrenchcourtleviedfinesontheAOLsubsidiary,requiredittopublishthejudgmentinthenewspaperandtoemailitssubscribersregardingthechanges. TotheextentthatawebsiteisdirectedatconsumerslocatedoutsidetheUnitedStates,orasignificantamountoftransactionsemanatefromcertaincountriesorfromregionswithuniformlaws,suchastheEuropeanUnion,anevaluationoftermsandconditionsoughttobemadeundersuchforeignlawtoassesscompliance.Thewebsite’sproprietorwillalsoneedtoconsiderthelawsofdifferentstateswithintheU.S.,aswellastheprovisionsofU.S.federallaw.Seediscussionbelowunder"Whatbodyoflawgovernsmyecommercesite?" HowcanIprovethatIhaveacontract? Evenifthetermsandconditionsareenforceableintheory,thewebsiteproprietormayneedtodemonstratethatacontractwasmadewhenitseekstoenforcesuchterms.Thisrequirespreservationofthecircumstancesunderwhichthetermsandconditionswerepresented,inordertoestablishthatnoticeandtheopportunitytoreviewsuchtermswasadequate.Sincewebsitestendtoberedesignedwithgreatfrequency,thewebsiteproprietorshouldmaintaincopiesofeachversionofthepageswithanylegalnoticesorlinkstothem,andthetermsandconditionsthemselves,allastheyappeartotheuser.Inaddition,everytimethetermsandconditionsarerevised,acopyofeachversionshouldbepreserved,alongwithitsdatesofuse. Iftheprocessreliedontoestablishthecontractisnotapparentfromcopiesofthescreens,thenitshouldbedocumentedinamemorandum.Forexample,thefactthattheprogramwillnotletauserpastacertainpagewithoutclicking"Iagree"maynotbeapparentfromacopyofthe"Iagree"screen. Somecourtsandcommentatorshavesuggestedthatpreserving"click-streamdata"pertainingtoeachindividualtransactionwouldbeusefulinestablishingtheuser'snoticeoftheterms.Suchdatacouldindicate,forexample,whetherauseropenedthelinktothetermsorbypassedthem.Thesophisticationofthetoolsused,andquantityofdatamaintained,willlikelyvarywiththenatureofthecontractandtheimportanceoflaterenforcementoftheterms. CanIsimplyposttermsandconditionsonmysite? Somewebsiteproprietorssimplyposttermsandconditions,generallybehindalinklabeled"termsandconditions"or"legalnotices".Theydothiswiththeexpectationthatthetermswillbeenforceablewithoutaspecificmanifestationofassentbytheuser,suchasbyclicking"Iagree"or"yes".Thetermsthemselves,oraseparatelegendonthehomepage,maycontainstatementsthatthepostedtermsareintendedtocreateabindingcontractandthatcertainaction,suchaspurchasingtheproduct,or"useofthesite,"isdeemedanacceptanceofsuchterms. Thereareonlyafewcasesaddressingtheenforceabilityofthese"browse-wrapagreements"(asopposedtonumerouscasesaffirmingtheenforceabilityof"click-wrap"agreements,whichrequiretheseparateclickof"Iagree"ortheliketoindicateagreementtotheterms.)Thebrowse-wrapdecisionsarehighlyfact-dependent.Few,ifany,presenttheclassicsituationwheretermspostedbehindaclearly-labeledlinkareenforcedagainstauserwhowasn'tinformedofthembyanothermeans,suchasbyletterorbyrepeatedexposure. Whilenoapproachcanguaranteethatagiventerminawebsite’stermsandconditionswillbeenforceable,thecaselawaddressingbothclick-wrapandbrowse-wrapagreementsprovidessomeguidanceastohowtermsandconditionsshouldbepresentedinordertoincreasetheirchancesofbeingenforced.Themostimportantfactoristhattheusergetsnoticethattheproposedtermsexistandaremeanttocreateabindingcontract.Thisisbecausetheconductthattypicallypurportstoindicatetheuser'sassenttotheterms,namely,usingthewebsite,conductingasearch,purchasingtheproduct,ordownloadingthesoftwaremaybecoincidental. Whethernoticeofthetermsandconditionswillbeconsideredadequateisafunctionof(i)thephysicalprominenceofthenotice,suchasplacementonthepage,fontsize,andcolor,(ii)thecontentofthenotice,i.e.,doesthenoticehandmetermsthemselves,(oronvariouspages)linktothem,makeitclearthatthetermsarebindingandthattakingcertainaction,suchasproceedingpastthehomepageplacinganorder,orsubmittingaquery,constitutesassent,and(iii)thetimingofthenotice,i.e.,isavailablebeforetheactionwhichpurportstomanifestacceptanceistaken? Thesitemustgivetheuseranadequateopportunitytoreviewthetermsandconditionsbeforebeingconsideredboundbythem.Displayingtheagreementinanunreasonablysmallviewingwindow,employingmultiplehyperlinkstoaccessit,orprovidingonlyaone-timeopportunitytoreadit,maynotprovideanadequateopportunityforreview.Inaddition,thetermsandconditionsshouldbeabletobestoredand/orprintedbytheuser.(See"Areelectroniccontractsenforceable?") Yet,evenifthereisadequatenoticeandareasonableopportunitytoreviewtermsandconditions,thereisnoguarantee,atthispointintheevolutionofthelaw,thattermsandconditionswhicharesimplypostedonthesitewillcreateavalidcontract.Accordingly,iftheenforceabilityofthetermsandconditionsisextremelyimportant,orifthetermsareunusualorparticularlyunfavorabletotheuser,arisk/benefitanalysismayleadyoutoadoptaclick-wrapformat. HowdoIamendtermsandconditions? Therearenouniformlawsspecificallydirectedathowtoamendelectroniccontracts.Attemptsbywebsiteproprietorstoaltertheirstandardtermsandconditionshavecomeunderattack,mainlyinthecontextofamendmentstoprivacypolicies.Suchscrutinyhascomeprimarilyfromgovernmentregulators,namely,theFTCandStateAttorneysGeneral,undertheirjurisdictiontoprohibitunfairconsumertradepractices,andfromconsumergroups.Thereareanalogoussituationsfromthe"paperworld",forexample,wherecreditcardcompaniesorlong-distancetelephoneserviceprovidersattempttomakeacross-the-boardchangestotheirtermsofservicebymeansofamassmailing,orwhereemployersattempttochangeuniformemployeepolicies.Theimpactofanamendmenttothetermsandconditionsisgreaterwhenthereareongoingservicesbeingprovided,therearerepeatcustomers(whomaynotbeinclinedtoreadthetermsandconditionseachtimetheymakeapurchase),orthecompaniesabilitytodisclosepersonalinformationisbeingliberalized.Withrespecttotheliberalizationofdisclosingsensitivepersonalinformation,somecourtshaverequiredaffirmativeopt-intosuchchanges. Asisthecasewiththeenforcementofelectroniccontractsgenerally,itismorelikelythatindividuallysigned(or"clickedon")agreementstonewtermswillbevalid.Thisistrueeveniftheoriginaltermsreservedtherighttoamendatwill.Nevertheless,certainmeansofpresentinganamendmentshouldincreaseitschancesofbeingenforced.First,advancenoticeoftheamendment,inaformreasonablycalculatedtocatchtheattentionoftheuser,shouldbeprovided.Inadditiontoprominentlypostingnoticeoftheamendmentonthehomepage,somewebsiteproprietorshavesentindividualemailstosubscribers,alertingthemtothechanges.Second,thecontentofthenoticeshouldindicatethenatureoftheamendmentandwhenitwillgointoeffect,allowingsufficienttimeforuserstocomeuponthenoticeandreacttoit.Third,thereshouldbeanoptionforcustomersnottoagreetothechange,whetherbycancelingtheirservice,orbyadvisingthecompany,inwhichcase,theoldrulesshouldcontinuetoapplytothem. Ahigherdegreeofprotectiontothecustomershouldbeconsideredwheretherightsbeingamendedareimportantonesandthechangesaremateriallyadverse.Ofcourse,youcannotproposetermsinanamendmentwhichwouldbeillegalorunconscionable,ifcontainedintheoriginaltermsandconditions.