Are Your Terms and Conditions Legally Binding?

If you were asked to provide irrefutable proof that a particular user accepted your Terms and Conditions, would you be able to? Could you tell when they accepted it and what version was live at the time of acceptance? Your answers to these questions will determine whether or not your terms and conditions are legally binding. 

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 these agreements is the Terms and Conditions, commonly known as Terms of Service, Terms of Use, and/or User Agreement. 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 and Conditions are terms 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). When the user accepts the terms – i.e. checking a box or clicking a button to indicate acceptance – the Terms and Conditions become a legally binding contract. However, proper presentation and acceptance methods are key to enforceability.

Companies that do a high volume of business online are most at risk of having unenforceable Terms of Service agreement(s). In order for your Terms and Conditions to be enforceable, you have to prove that a particular user accepted a particular version of a particular agreement at a specific time. This is often proven using screenshots that capture the design of the screen at the time of acceptance, or back-end records that connect users to specific agreements. Companies that do a large volume of business tend to have the most difficulty keeping track of individualized records of acceptance. If you cannot provide this evidence, your legally binding Terms and Conditions are not legally enforceable.

In court rulings, the presentation of legal agreements can make all the difference in how enforceable they are. Specifically, using clickwrap agreements to present your terms to users you have to ensure that the user is put on notice and affirmatively accepts the agreements before or while carrying out their ultimate transaction. 

To put the user on notice, you must conspicuously present your Terms of Service. This means ensuring that the user saw your agreement, had the opportunity to review your agreement, and affirmatively accepted the agreement. According to the courts, conspicuous presentation of your agreements means:

1. Bold and distinct hyperlink that contrasts against its background
2. A hyperlink connected to the most up to date version of your agreement
3. Language that indicates the existence of the agreement and connects a particular action (checking a box, pressing a button, making a purchase, etc) with its significance (assent to the Terms and Conditions linked).

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. If not, the court can rule that the user was not aware that they were agreeing to terms, thereby making the contract invalid. 

According to contract law, in order for a contract to be valid, there must be an offer, consideration, and acceptance. Being able to prove your customer accepted your terms (and therefore entered a contract with you) will determine whether or not your Terms and Conditions are enforceable. 

If your customer did not (or did not need to) accept your terms before using your site, purchasing your product, or using your software, they are not bound by your Terms and Conditions. If they did not accept, then your business will not be able to enforce any of the clauses within your agreement, including, for example, your clause to compel arbitration.

With clickwrap agreements, users can manifest assent to your website’s Terms of Service by clicking a button or checking a box attached with your agreement. The design of the page can determine whether the user was on actual or constructive notice, but you will also need back-end records that prove that an individual customer accepted a specific version of your Terms of Service during a particular transaction. This means maintaining back end records that track versions, dates, IP addresses, device details, etc.

If you have updated your terms, you need to notify your customers, users, or consumers. There is no way for them to automatically be aware that your Terms and Conditions have been updated, and therefore they cannot agree to your new Terms. 

Also, it is not best practice to include a clause in your terms of service that you, the business owner, are able to change the terms with no prior notice. Otherwise, then users are beholden to all future contracts that don’t even yet exist. The inclusion of this clause can make your Terms of Service unenforceable.

Being aware of these things can help businesses start to make changes that increase their likelihood of success when defending their terms in court. And Ironclad can help you understand  These are only some of the ways the courts may deem your Terms unenforceable. Learn more by downloading Clickwrap Litigation Trends report or getting a demo of Ironclad’s clickwrap transaction platform.