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If you were asked to provide irrefutable proof that a particular user accepted your Terms of Service, would you be able to? Could you tell when or what version? If not, you have a problem.
When a user visits a website or uses the services provided by a website, that visit or use is typically governed by a set of website legal agreements, one of which is commonly referred to as “Terms of Service.” Since these agreements defy the conventional manner in which contracts are presented and accepted, the enforceability of these contracts is often misunderstood and challenged in courts.
Terms of Service are terms and conditions to which a user must first consent to prior to the use or purchase of a site’s service (i.e. purchase of goods, access to a web app, or access to a membership/registration based site). Upon proper acceptance by the user, the Terms of Service become a legally binding contract. Proper presentation and acceptance, though, is one of the keys to enforceability.
For online marketplaces, this is especially crucial, as the volume of users opens you to incredible risk, which means there ought to be legal protections in place for your business. And while your Terms of Service can provide these protections, they are useless if unenforceable.
If your Terms of Service are unenforceable – they are essentially useless. There are established standards for what makes a contract enforceable based on what the contract actually says – that is not covered here.
In the context of a Terms of Service, it really boils down to how those website legal agreements are presented to the user for review and acceptance.
A few questions to ask to determine the enforceability of your Terms of Service:
In court rulings, the display/presentation of your legal agreements can make all the difference in their enforceability. If your Terms of Service wasn’t conspicuously presented, counsel can easily make the case that the user of the site did not see and the notice and therefore was not aware that were terms to be agreed to.
Copy-and-pasting from an online template you Googled is not enough. If you use a clickthrough (also known as a clickwrap) to present your terms, sometimes a simple link and an “I agree” button is not enough. Not only must the user know that the Terms of Service exist, but they also must have actual or constructive notice that use of the website is subject to the Terms of Service.
According to contract law, in order for a contract to be valid, it must be accepted by users. While this may seem like a really simple thing, most online marketplaces overlook it.
If your customer did not (or did not need to) accept your terms before using your site, purchasing your product, or utilizing your software, they are not bound by your Terms of Service. If they did not accept, then your online marketplace will not be able to compel arbitration, and your likelihood of things like class action suit increases.
In clickthrough (clickwrap) agreements, acceptance of your site’s Terms of Service can generally be manifested via the user clicking a button or checking a box. In browsewrap agreements, on the other hand, implied consent may be given, such that upon use of the site, the user has manifested its acceptance of the Terms of Service. Meeting the burden of facilitating, and proving, acceptance can be difficult, though.
Even if you are 99.99% sure that users had to sign your terms before using your site, would you be able to prove it? Would you be able to provide the courts with irrefutable evidence that a particular customer signed these particular versions of your terms?
You need to keep track of version, dates, and other acceptance data. Without this crucial record keeping aspect, your terms are probably not enforceable.
If you have updated your terms, you need to push it out to the buyers and sellers that are using your online marketplace platform. You cannot expect customers to automatically be aware of your new terms and sign it telepathically. Courts frown on this.
Related: Clickthrough for online marketplaces
Also, it is not best practices to include a clause in your terms of service that you, the marketplace owner, are able to change the terms with no prior notice. Otherwise, then users are beholden to all future that don’t even yet exist. The inclusion of this clause can make your Terms of Service unenforceable.
These are only some of the ways the courts may deem your Terms unenforceable.
The enforceability of your Term of Service plays a significant role in the conduct of your business. PactSafe is designed to help you ensure that your Terms of Service and other website legal agreements are enforceable.
Do you want to learn more about how you can protect your online marketplace's Terms of Service? Read our Clickthrough Litigation Trends white paper to learn about what makes your clickthrough terms enforceable!