Applying click and URL conditions
“If we attach our conditions, they will want to negotiate. Let’s just link to them instead. Each attorney has worked with clients who want to shorten the sales cycle, reduce the friction of acquiring new users, and minimize negotiating terms and conditions. But while it’s essential to keep these business objectives in mind when designing a contracting process, it’s equally essential to ensure that your terms will actually be enforceable if you ever find yourself faced with a court.
As we often tell our clients, the enforceability of a contract is not a question of degree: whether or not you have a binding contract is a binary test – you either formed a contract or you didn’t. The real question is, How likely is a court to recognize that you did indeed form a contract? This analysis is fact-based and will have practical implications for how you present your terms to your customers and obtain their consent.
Use of linked terms to link customers through a digital interface
If you’re selling a browser-based app or subscription service, you’ll have to decide “how much is enough?” when it comes to getting your customers to agree to your terms. Should your customers be forced to scroll through terms? Click on a box? Click on two boxes? Or should you drop a link in your footer and hope for the best?
These decisions will impact your business – courts may pay particular attention to what you do and how you do it when deciding whether your terms are binding on users.
A recent Massachusetts Supreme Judicial Court (SJC) decision regarding Uber’s terms of enforcement, which follows a 2018 First Circuit case on the same topic, offers a two-pronged test to determine whether a contract was formed: (1) if there is reasonable notice of the terms, and (2) if there is a reasonable manifestation of consent to these terms. The SJC concluded that Uber’s process failed on both counts, citing deficiencies in how and when terms were presented to users, that users were not required to click or scrolling through Uber’s Terms (which the court found was different from the process Uber used to obtain its drivers’ assent to the Driver’s Terms and Conditions), and the misleading title of the page on which the terms appeared , to name a few.
When designing a digital contracting process, the questions you need to ask yourself are: how will I demonstrate that the customer has received reasonable notice of these terms, and how will I show reasonable manifestation of the customer’s assent to these conditions?
- Reasonable notice. Editors should establish a standalone section of the signup or registration process where the customer can clearly see that agreement to the terms is required to proceed. This step should include a title that references the terms, should give the customer an easy way to access the terms, and should encourage the customer to review the terms before accepting. Some courts have found that a user can be bound by terms without actually reading or viewing the relevant web page, as long as it is clear that consent to the terms is required and the user has the ability to access the terms (even if that consumer has not opened the link to the terms).
- Expression of assent. Clicking on an acceptance prompt is the most common way to obtain user assent to terms and conditions. In the recent SJC decision, the court described how Uber confused the issue as to what the user agreed to because “the statement explaining the link between account creation and acceptance of terms, which would encourage opening and revision of the conditions, was displayed in a less prominent way than the other information on the screen. There, the title of the page and the text on the accept button prompted the user to link the payment and create an account, not to accept the legal conditions. Uber could have established a clear manifestation of user consent if it had provided a dedicated “accept” button or checkbox.
Using linked terms to bind customers in a signed document
Where your product is based on a purchase order or other non-electronic document signed by a customer, the incorporation of contract terms from a web page by reference may be enforceable if:
- The intention of the parties to integrate the external website is clear. It may not be enough for a contract to state that the business terms are “on” a particular web page, or that it is “subject” to the terms located on a particular web page, because the courts have held that such language does not reflect the specific intention of the parties to incorporate the terms found at the URL into the underlying contract between the parties. Instead, writers should use a clear “entire agreement” style clause. which explicitly incorporates the terms into the contract that the client signs, or a clause stipulating that by signing the contract, the user certifies having read and accepted the conditions set out at the URL, or both.
- Embedded terms are clearly contained within the referenced URL and labeled appropriately. If a contract links to a general web page ending in “/legal/”, you cannot rely on terms that may be posted to other URLs from the same root, unless the contract specifically refers to these conditions by URL and by name. For example, if you properly embed your terms of service by referencing the URL “yourcompany.com/legal/terms”, this alone is not enough to bind customers to your acceptable use policy on “yourcompany .com/legal/AUP” unless you have separately referenced and incorporated this document into your contract. Editors should take care to refer to the referenced terms using exactly the same title as the referenced web page, and if the name or the webpage may change over time, the language of the contract should also contain a phrase such as “the terms of service posted on [URL]or successor website” (emphasis added).
Bonus topic — How do I update my terms and conditions?
Businesses change, so do contracting best practices, and customers always want to know how to update their terms online. The answer is twofold: (1) create an update mechanism on your terms from the start and (2) if in doubt, ask your users to click again.
- Integrate mechanisms from the start. The mere fact of posting revised terms online does not bind users to them. Instead, you actually have to notify users of the changes in writing. However, the type of notice can be established by the original language of the contract. For example, your terms of service may state that “these terms may change at any time upon written notice”. and may provide that notices may be sent by electronic mail. This way, you can notify users via email that updated terms will be effective as of a particular date, and their continued use of the service after that date constitutes acceptance of those amended terms. Although a court may find that simply posting new terms of service and changing the “last updated” date may be sufficient to bind users if the original contract language of your terms of service describes Like the update mechanism, writers should consider the many ways in which such a mechanism might be vulnerable to counterarguments from an aggrieved user.
- If in doubt, re-consent. Particularly if there is a material update to your terms (for example, if you add a forced arbitration clause or a class action waiver), the chances of enforceability will increase if you ask users to re-accept your terms the next time they log in. in.
If you update your terms over time, keep a record of each update and when it was enacted (in addition to records showing which users accepted or were notified of each new version and when). Indeed, when analyzing the enforceability of clauses, the courts will examine the clauses that have been validly incorporated into the contract at the time when enforcement is sought. A record of time-stamped and historical changes to online terms — as well as notices sent to consumers about the changes — will help a business display the terms that were in effect at the relevant time. A court held that a printout of the timestamped terms years after the relevant events is not sufficient to demonstrate that they were in effect at the time of the relevant events.