If your business has a website, there is a good chance you have posted Terms of Use and a Privacy Policy that you expect to act as contracts that govern users and the use of your site. If you use our site, you are stuck with our terms, right? But are your terms of use worth the pages they are displayed upon? A recent California court ruling suggests that they may not be enforceable at all. Terms of Use and privacy policies that do not require the user to take any action to affirmatively accept those terms fall into a category of Internet contracts commonly referred to as “browsewrap” agreements. E-commerce is virtually built upon this practice. Browsewraps are distinguished from “click-wrap” or “click-through” agreements where the user must actually click a button such as an “I Accept” button or take some other action in order to proceed with the use of the site.
Browsewrap is everywhere
If you are like most website owners, your posted terms of use are accessible only by hyperlinks somewhere on the pages that people actually use. In fact, your UI/UX people have probably intentionally buried these unattractive links down near the footer of page because no one likes to cloud your customers’ screen with something as boring and unproductive as legal “boilerplate.” You even know from your site analytics tracking that few people actually ever click on those links anyhow. Mission accomplished! But that is where the problem lies: courts do not like to enforce “contracts” that people do not read or at least take some action that puts them on notice that they are being bound to the terms.
That is exactly what happened to Proflowers.com in the case linked above: the court found that the terms of use hyperlinked on the page were unenforceable and threw them out. While I seldom recommend reading published cases for practical business advice, this case actually goes through details on the site design and you may find some of the details frighteningly similar to your own site layout. Have your web designers read it.
A Practical Alternative?
Now I realize that the volume of use on any moderately successful website generally eliminates the possibility that you can efficiently enter into a traditional contract with every single user. For traditional high-volume Internet contracts, a “click-wrap” format, where a user must click a button accepting key terms is much more prudent than a browsewrap link. Even if your user does not actually read the terms, courts are less inclined to side with users that realize they are being bound by terms but still refuse to read them. Just posting the terms of use on a page that no one ever visits is a different matter.
Understand that even the “click-wrap” format is not a guaranteed way to form a binding contract. Click-wraps have been successfully challenged as well. Take additional actions to make it clear that users had an opportunity to see and review the terms. Ideally, the site features should require a user to scroll through the entire agreement before the “I Accept” button can even be clicked. That makes it all the more difficult for your users to argue that they did not realize what they were clicking. Never limit the time that a user has to read the terms being accepted. Make the terms as easy to understand as possible. As an additional best practice, try to emphasize the most important terms in your online contracts in order to make them highly visible. For instance, placing LIMITATION OF LIABILITY provisions in an “all caps” format and perhaps with bold and underlined fonts makes it all the more difficult for users to claims that they never saw the terms. Let your UI/UX people use their creativity on making those key terms as obvious as possible. Let them know that the goal is to make the terms more obvious and more understandable–not to bury them. Still, expect challenges to enforceability.
Is a Standard Agreement All That Impractical?
Finally, consider whether you ought to have good, old-fashioned written and signed agreements for at least some users or some functions of your business. Written and signed contracts will not be scrutinized in the manner that browsewrap and click-wrap agreements are scrutinized. I find that many website owners actually want to enter into truly binding terms with only a small subset of users that are actually buying products or services. With this subset (at least where the dollar amounts or terms are particularly important) a written signed contract may make sense. Acceptable e-signature formats make exchanging electronic contracts and signatures very efficient.
I see many companies that want to use a click-wrap format because they really want to create a sense of high volume demand for their products or services in situations where they could easily obtain written contracts during the early stages of their business. They want to create the perception that they are a much bigger company that could not possibly enter into thousands of written contracts. That is a business decision but it should be made with the knowledge that click-wrap agreements, and even more so browsewrap agreements, may not be enforceable when push comes to shove. Strongly consider a measured approach in your efforts to balance usability with enforceability.