Definition and Explanation
- Acceptance of Terms: This clause states that by using the platform, the user agrees to comply with the terms and conditions set forth in the agreement.
- User Obligations and Conduct: These provisions outline the behavior expected from users, including any restrictions on what they can and cannot do. They may also cover user responsibilities related to account security.
- Intellectual Property Rights: These terms define who owns the content on the site (such as text, images, and videos), and how users can use this content. They may also address user-generated content and its ownership.
- Disclaimer of Warranties and Limitation of Liability: These clauses often state that the service is provided “as is” and disclaim certain warranties. They may also limit the company’s liability in case of certain damages or issues.
- Indemnification: This part requires users to compensate (or “indemnify”) the company for any losses it suffers as a result of the user’s violation of the terms.
- Termination: This section outlines the circumstances under which a user’s account may be suspended or terminated, and what happens when an account is closed.
- Dispute Resolution: These terms often include an agreement to resolve disputes through arbitration rather than court litigation, and may include a class action waiver.
- Changes to Terms: This clause reserves the right of the company to change the terms at any time, and outlines how users will be notified of any changes.
Purpose and Function
Legal Basis for Enforceability
Contract Law Principles
‘Clickwrap’, ‘Browsewrap’, and ‘Sign-in-wrap’ Agreements
In general, courts have found ‘clickwrap’ agreements to be more enforceable than ‘browsewrap’ agreements, as they provide clearer evidence of the user’s consent to the terms. However, the enforceability of these agreements can still depend on a variety of factors, including how the terms are presented and whether the user had a reasonable opportunity to review them.
Analysis and Impact
- Active Consent: ‘Clickwrap’ agreements, which require users to actively indicate their agreement to the terms, have generally been found more enforceable than ‘browsewrap’ agreements.
Factors Influencing Enforceability
User Awareness and Consent
- Implicit Consent: In ‘browsewrap’ agreements, consent is assumed to be given by the user simply by using the website or service. However, this form of consent has been more contentious in the eyes of the law due to the lack of an explicit action indicating agreement.
Reasonableness of the Terms
- Substantive Fairness: This refers to the fairness of the terms themselves. If a term is overly one-sided or oppressive, it may be deemed unconscionable. For example, a term that absolves a company of all liability under any circumstances may be seen as unfair.
- Procedural Fairness: This relates to the fairness of the process by which the agreement was entered into. Were the terms hidden in a long document full of legal jargon? Were they presented in a way that was difficult for the average user to understand? If the terms are presented in a misleading or deceptive way, this could impact their enforceability.
Prominence and Accessibility of Terms
- Notice: Was there clear notice to the user that by using the site or service, they would be bound by certain terms? If the terms are hidden away or difficult to find, a user could argue they were not aware of them.
- Clarity: Are the terms clearly written and easy to understand? Courts are less likely to enforce terms that are ambiguous or confusing.
Current Challenges and Controversies
Debates Around Enforceability
Cases of Unenforceability
Impact of International Laws and Regulations
The Role of Technology
These challenges and controversies reflect the dynamic nature of this area of law and underscore the importance of staying up-to-date with legal developments and best practices.
Transparency and Accessibility
- User-Friendly Language: Use plain English and avoid complex legal jargon where possible. Consider using bullet points or short paragraphs to make the document easier to read.
- Summaries or Highlights: Consider providing a summary or “in plain English” sidebar next to more complex terms to help users understand what they’re agreeing to.
Clear Consent Mechanism
- Active Consent: Use ‘clickwrap’ agreements, which require users to actively click a button indicating they agree to your terms. This could be a checkbox that users must click before they can proceed with registration or use of your service.
Fair and Reasonable Terms
- Balance of Rights: Avoid terms that are excessively one-sided in favor of your company. For instance, a term that completely absolves your company of liability under any circumstances might be considered unfair.
- Respect User Rights: Ensure your terms do not infringe upon the basic rights of the user. For example, a clause that tries to prohibit a user from ever making negative comments about your company could be seen as infringing on their right to free speech.
- Compliance with Laws: Make sure your terms are in compliance with applicable laws and regulations. This includes privacy laws, consumer protection laws, and more.
Regular Updates and User Notification
- Periodic Reviews: Regularly review and update your terms to ensure they remain relevant as your service evolves and legal standards change.
- Change Notifications: When you update your terms, notify your users. This could be done via email, a notification on your website or app, or other means. Make sure to give your users enough time to review the changes before they take effect.
- Consent to Changes: Consider requiring users to agree to the new terms before continuing to use your service, especially if the changes are significant.
Frequently Asked Questions (FAQ)
If certain terms are found to be unenforceable, it could leave your company exposed to legal risk in areas that those terms were intended to protect. For instance, a term limiting your company’s liability could be crucial in the event of a lawsuit. If such a term is found to be unenforceable, your company could potentially face increased liability. Beyond legal consequences, there could also be reputational damage. If a court finds your terms to be unenforceable, it may lead to a perception that your company is not acting fairly or transparently, which could harm your relationship with users and the public.
What is the difference between a ‘clickwrap’ and a ‘browsewrap’ agreement?
A ‘clickwrap’ agreement is one where users must actively indicate their agreement, usually by clicking an “I agree” checkbox or button, before they can use the service. This type of agreement is more likely to be found enforceable because it requires a clear, affirmative action by the user to indicate their agreement.
On the other hand, a ‘browsewrap’ agreement is one where the terms are generally posted on the website and users are assumed to agree to them by simply using the site. These agreements are less likely to be enforceable because it’s harder to prove that users were aware of the terms and actively agreed to them.
A term is generally considered ‘unconscionable’ if it is overly harsh or one-sided in favor of the party who drafted it, to the detriment of the other party. Courts usually look at a combination of factors to determine if a term is unconscionable, such as the bargaining power of the parties, whether the user had a reasonable opportunity to understand the terms, and whether the term is in line with reasonable expectations or public policy. If a term is found to be unconscionable, it may be unenforceable.