As consumers continue to purchase more and more products and services over the Internet, online agreements have become an integral part of today’s marketplace. But as we all know, many online consumers don’t read the terms and conditions before using a website or its services. So how do you ensure that your client’s online agreement is actually enforceable?
Here are some best practices for creating and displaying an enforceable online agreement, as recommended by the American Bar Association:
- Opt for clickwrap agreements. Online agreements are generally characterized as either “browsewrap” or “clickwrap” agreements. Browsewrap agreements post the terms of service on the website, often as a hyperlink at the bottom of a webpage, and don’t require a user to affirmatively assent to the terms before using the site or its services. Clickwrap agreements, however, require users to affirmatively click a box indicating that they accept the terms of service, which are often displayed in a text box on the same page. Courts have often refused to enforce browsewrap agreements due to a lack of reasonable notice or mutual assent (see, e.g., Nguyen v Barnes & Noble, Inc. (9th Cir 2014) 763 F3d 1171), but have generally enforced clickwrap agreements, finding that the user’s interactive conduct manifested both notice of and assent to the terms. See, e.g., Koresko v RealNetworks, Inc. (ED Cal 2003) 291 F Supp 2d 1157.
- Provide easy, automatic access to the terms of service. Because actual or constructive notice is required, it’s important to make the terms as accessible as possible. The assent box should appear at the end of the agreement so that the user is required to scroll or click though the terms before accepting. The user should also be able review the terms at any time during the acceptance process.
- Display the terms in a clear and legible format. The terms should be presented in a way that complies with any applicable laws on format and content, such as laws governing notice, disclosure, and conspicuousness. A court will be less likely to enforce the agreement if the terms are illegible or otherwise hidden.
- Require an affirmative action to express assent. The acceptance process should require the user to accept or reject the terms by affirmatively clicking a box and should clearly explain the consequences of each action. The words for acceptance or rejection should be unambiguous (e.g., “I Agree” or “I Disagree”). The greater the choice the user has to accept or reject the terms, the more likely a court will enforce the agreement.
- Provide an opportunity to discover and correct errors. The acceptance process should provide an opportunity to review transaction details and correct potential errors. This could include providing a summary of the user’s order and asking the user to confirm the order before final acceptance.
- Maintain accurate records of the transaction and make them available to the user. Finally, it’s important to have an accurate and consistent method of preserving records of the agreed-to terms and the manner in which the user expressed acceptance, just in case litigation does arise. Users should also be able to store or print the electronic record to ensure its enforceability.
In addition to considering these recommendations, make sure your online agreements include all the substantive elements of an enforceable contract (e.g., consideration, adequately defined material terms). Similarly, online agreements won’t be enforced if they’re unconscionable or include terms or conditions that could be considered unreasonable or unfair to the average consumer.
For a detailed discussion on the enforceability of various online agreements, as well as practical advice and sample contracts, check out CEB’s California Law of Contracts, chap 4; Drafting Business Contracts: Principles, Techniques and Forms, chap 18.A; and Internet Law and Practice in California, chap 7.
Other CEBblog™ posts you may find useful:
- Draft Agreements with Contract Principles in Mind
- Contract Drafting 101
- 5 Writing Tips for Every Contract You Draft
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