Terms and Conditions: 3 Crucial Factors
The terms and conditions are one of the most important contracts for companies that do business online. Many businesses focus on drafting terms and conditions to ensure they cover all foreseeable situations and offer maximum protection. However, there are other factors that determine their enforceability that you should be thinking about. If your terms and conditions are not enforceable, then all the time and effort spent in drafting a watertight agreement will be a waste.
Terms and conditions are generally enforceable if you provide data that identifies an individual user, the version of the agreement they accepted, the acceptance time, and so on. Many businesses are not concerned about these things, but you should be.
There are key things you should be concerned about. Things like, does the design of the layout of your terms and conditions make them conspicuous? How do you prove that a user accepted your terms and conditions? How do you show the particular version that a user accepted? Proper management of your terms and agreements demands that you’re able to answer these questions.
Three things you’re not thinking about in your terms of service
Having a terms of service is important. Your terms and conditions are your defense if a user sues your business. So, you want to ensure they are enforceable. If you want to have a terms and conditions agreement that can stand if challenged in court, consider these three things.
Collecting back-end records
Terms and conditions agreements are usually presented as clickwrap agreements, where users consent by checking a box next to acceptance language—such as “I agree”—or by clicking a button. Many companies also present them via browsewrap, but that is not advised because browsewraps have low enforceability rates in court.
Like all contracts, there must be an offer and acceptance of the offer before there can be a valid agreement. Your users must consent to the term and conditions agreement, and you must have enough evidence to prove that.
So, if your customers didn’t consent to your terms and conditions before using your services or purchasing your product, you cannot enforce it against them. When a user argues that they didn’t assent to your terms and conditions because they didn’t see it, how do you prove they did?
This is where collecting back-end records comes in. Collecting back-end records helps you to prove that there was a valid offer and acceptance. Back-end records can help you prove the individual user that accepted your terms and conditions, how it was presented to them, the time of acceptance, and the version of the agreement they accepted. Your record of acceptance should include:
- The individual user that accepted the agreement and identifying information about them
- The contract version the user accepted
- The date and time of the acceptance
- Whether the user viewed the agreement
- The operating system and browser used to accept the agreement
- Screenshots that show the design of the page at the time of acceptance and the steps the user was taken through
- Information detailing how the agreement was presented to the user
Designing the screen for optimal enforceability
How you present your terms and conditions determines whether the court will enforce it. So, you need to pay attention to the design and layout of the screen, how you present the agreement, and how you lead the user to accept it.
The user must have clear notice of the terms they are consenting to. You should use colors or fonts that are clear to help the user to be aware that they are accepting an agreement. Display your terms and conditions in an obvious spot, and design the page to make it easy to read as well. This means your hyperlink should contrast with the background in a bold and distinct color. The hyperlink should lead to the most recent version of the agreement.
The user should have an opportunity to review the agreement before giving their consent. Even if they don’t read it, it’s enough that they had the opportunity to do so. In that case, they’ll have constructive knowledge of the agreement.
You must give the user a reasonable notice of the existence of the agreement and request they assent to it before they can proceed with the transaction. You can do this by stating clearly that using the platform is predicated on them accepting the terms and conditions. Designing your site to bar a user from proceeding to the next stage without giving their consent will improve the enforceability of your terms and conditions. This way, a user cannot successfully claim that they didn’t consent to the agreement.
In Feldman v. Google, Google’s terms and conditions were designed such that the plaintiff could not proceed in the transaction without clicking the “Yes, I agree to the above terms and conditions” button. The court held that “by clicking on ‘Yes, I agree to the above terms and conditions’ button, Plaintiff indicated assent to the terms.”
You shouldn’t check the button for the user; they should affirmatively check the box themselves. Pre-checking the box is considered bad practice and is outright banned in some jurisdictions.
If you present your terms of service as a sign-in-wrap agreement, use similar language in both the button or box and the agreement. You could also place your agreement beside the acceptance box. This way you could prove that the user saw it before concluding the transaction.
Regular updating of terms and version control
You may decide to update your terms and conditions for many reasons. It could be to tighten a loophole you discovered, to include a provision you omitted, or to comply with new regulations. Whatever the reason, you must notify your users that have assented to the terms of service of the change in the agreement and get their consent again. Keep records showing that they were notified and that they agreed again.
You cannot unilaterally change the content of your terms of service, even if reserved the right to do so in the agreement. Doing so may make your terms and conditions unenforceable. The terms and conditions agreement is a contract of adhesion, where usually there is unequal bargaining power. Having such provision in your agreement is a clear case of you exploiting the unequal bargaining power existing in such transactions.
As the content of your terms of service changes, you need to maintain an audit trail of the versions users accepted. You need to provide data that shows an individual user and the particular version they accepted. If you can’t do this, your agreement may not be enforced.
Using Ironclad Clickwrap for your terms and conditions
If your company does a lot of business online, you’ll likely need a terms and conditions agreement to protect your business. You should then ensure that your terms and conditions are enforceable. Making them enforceable starts with how you design your screen and layout to ensure users have clear notice of the terms and conditions and that they affirmatively assent to it.
It includes collecting back-end records that provide enough evidence to demonstrate that individual users accepted the agreement and which version they accepted. Choosing the right contract lifecycle management (CLM) software provider that collects an audit trail of your activities is cardinal.
Enforceability of your terms and conditions also includes how you update the terms of the agreement, get users to assent, and how you manage the different versions.