22 December 2020
Online agreements challenge traditional contract law mainly because they are not a mutual agreement between users and developers. They are terms that must be accepted before users can proceed and that is not always considered fair.
The reason these agreements become legally binding and enforceable despite their deviance from traditional contracts is the fact that they are accessible. You create legally binding agreements by assuring that your users have notice of them and the opportunity to review them. This is how to make this work for your website, app or other online service.
A legally binding agreement is any contract with agreed upon terms which include actions that are required or prohibited. Traditionally, contracts address providing goods and services in exchange for payment, although they can also reflect barter situations that trade services or goods.
When done correctly, a legally binding agreement is enforceable in a court of law. Parties may collect damages if one of the parties fails to meet the requirements in the contract.
Generally, a legally binding agreement includes:
Online agreements like Terms & Conditions, Privacy Policies, and End User License Agreements contain the elements above. They describe services rendered, any subscription fees, and duties owed to users, like protection of privacy.
But they are not negotiated between developers and users. They merely exist and users must accept them or never receive access to a website or app. This has produced challenges with traditional contract law.
Online agreements need to be legally binding to allow you to enforce rules, protect privacy, avoid liability, and notify users of what to expect.
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The issue that often arises with online agreements attached to websites is whether the parties actually agreed to the terms. In most contract scenarios, parties negotiate to come to terms everyone finds acceptable. The signed contract is a manifestation of that discussion.
However, when it comes to Privacy Policies, Terms & Conditions, End User License Agreements, and Disclaimers, there is no negotiation. Users only have the choice to agree to the terms and use the app or decline the terms and lose access.
Fortunately, courts provided guidance for these agreements so they remain enforceable. The primary element is notice - that users can find the agreements and have the opportunity to review them.
Factors affecting the enforceability of online agreements include:
These factors are relevant to all online agreements. They work differently with each agreement but there are also similarities.
Online agreements become legally binding in the same ways but it will look different with each different type of agreement. This is how these requirements affect different agreements.
Bluemail works with Google to manage email boxes. It makes acceptance clear with separate "Deny" or "Accept" buttons.
Acceptance at signup is standard. Makr provides an example where it is clearly indicated that users accept the T&C when they create an account:
The End User License Agreement (EULA) is similar to a T&C in that it provides users rules for using the app or website.
However, it is more extensive in intellectual property protection because users download software to access the service. Developers need further protection to prevent copying and redistribution while emphasizing that the software is licensed for use--not owned by the user.
Naturally, the EULA presents to the user when they download software. Adobe Flash Player provides a link to the EULA and a checkbox to assure acceptance of the terms:
In addition to the notice at download, Adobe also makes it clear that users accept the terms by using its products. This is in the first paragraph of the EULA and while not sufficient on its own, it definitely clarifies the issue:
Since EULAs contain terms that are essential to protecting your interests, take an active approach to their acceptance. Require that users hit a checkbox or "I Agree" button before they download. That, along with the acceptance language in the document, will make your EULA legally binding.
Disclaimers exist in two places: the T&C, and in conspicuous places on websites. They are not contracts on their own as much as they are warnings or notices to users. They exist to inform users of possible risks and limitations of information or products on a website.
Courts rule disclaimers as acceptable and enforceable as long as they are easy to find. If you put them where a user cannot help but see them, they can protect you.
LexBlog provides a platform for lawyers to host blogs. It contains this disclaimer on every page to protect lawyers from liability. Users see it every time they finish reading a blog entry:
WebMd puts its Disclaimer at the top of the T&C:
If you take the approach of WebMD, have good acceptance procedures for your T&C. Practice overkill with active acceptance of updates and notices to users, especially if there is a good chance that users may consider you a trained professional (like with WebMD and its medical information).
If you decide to present Disclaimers on your website, use larger different fonts and other web drafting techniques to make them stand out. You can even create a pop-up with the disclaimer that requires users to click "OK" before they can proceed.
Online agreements are unique in that users do not give input to the terms they must accept. However, with a combination of clarity and transparency, you can assure your online agreements remain legally binding.
This article is not a substitute for professional legal advice. This article does not create an attorney-client relationship, nor is it a solicitation to offer legal advice.