Recommendations for creating Enforceable Online Agreements
Below is a list of recommendations for creating enforceable online agreements for vendors to consider when dealing with their online customers. This list is not exhaustive it has been created as guidance only for online providers to ensure that they are able to enforce their terms. Enforceability will depend on each particular circumstances of a transaction and if you take heed of the below, you may have a likelihood of enforcing your online agreement.
1) Do a Risk/Benefit Analysis
Do risk/benefit analyses on each remedy limitation, i.e. limit your liability by providing the product or services again or refunding the payment made for the service or product. Only allow remedies to the extent permitted under Consumer Laws.
For disputes, consider mediation or arbitration, which is fair and equitable in the given circumstances, and have each party paying its own costs with control mechanisms else this can sometimes cost more than what has been budgeted. In Australia, you can use professional mediators or you could go to the Australian Commercial Disputes Centre.
2) Jurisdiction
Select a choice-of-law jurisdiction that you are familiar and has a rational connection to the transaction. If you have consumer focused product or service, balance the use of exclusive jurisdiction and venue clauses against the risk that a court will find against you in relation to any misleading or deceptive conduct and unconscionable conduct on your part for providing the product or services.
3) Avoid Modification without any notice
Do not insert terms that allow the company or the service provider to change the contract unilaterally, else this will give an unfair advantage over the consumer. If you have to change or modify the terms, then its best to give reasonable notice to the consumer, together with the opportunity to accept or decline the modified terms.
4) Record Evidence of User Acceptance
Generally, online users are now well versed with this concept of recording user acceptance and the formation of each online agreement.
There are couple of ways service providers record acceptance, the most commonly used method is where the only way to access product or service is to scroll through the terms and click “I accept”, which is evidence that the user has accepted the terms.
If possible try keeping records of time, date, and source of acceptance.
Other forms may include having user registration or electronic signatures at the time of registration.
5) Require Acceptance Before Delivery or Payment
Require acceptance before payment or delivery. If payment and delivery occur before acceptance, then you need to ensure that the customer receives:
- Notice before payment or delivery that contractual terms will be provided later;
- A reasonable opportunity is given to the customer to review those terms after they are provided;
- For time sensitive transactions, e.g. ticket sales, provide consumer with opportunity to review terms outside of the time-sensitive window; and
- A right to return the product or terminate the service without incurring costs or for a refund if the customer does not agree to the terms.
6) Make Rejection Clear and Simple
Provide a clear, simple method for customers to reject the contract. Allow users to exit the process at any time. Do not require the customer to take additional steps or expend effort/money to reject the product or service once the contract has been rejected.
7) Make Assent Unambiguous
Secure an affirmative, unambiguous expression of assent to the agreement from the customer. The more the customer has to do, the better. Examples include:
- Mouse click “I accept” or “I agree” button;
- Type “I agree” and submit (speed-bump for users, but more deliberate);
- “I accept” checkbox next to each provision – especially unusual or onerous provision; and
- Offer alternative “I don’t agree” option with an explanation that the user cannot use or access the product or service.
8) Condition Use on Acceptance
Expressly state the user’s access to or use of the product or service is subject to these terms. Expressly state that you will not provide the product or service except pursuant to these terms.
9) Provide Notice of All Terms
Draw attention to the online agreement. Make sure the customer sees it, e.g. no “below the fold,” small print, or hidden text. Place the “Accept” option at the end of all terms. Require the user to scroll though all terms before making the acceptance action. Consider requiring the user to check an “I accept” box for each provision, especially for an unusual or onerous provision. No link to terms or scroll boxes. Advise user to print and keep a copy of the agreement.
10) Tip for Creating an Enforceable Contract
Draft in plain English, with no room for claims for misrepresentation or ambiquity.
11) Other considerations
Ensure compliance with Privacy Laws and depending on your third party integration, make it clear if you are sharing personal information and to what extent. If in doubt, please check the Australian Government’s Office of the Australian Information Commissioner’s website (www.privacy.gov.au), for matters relating to Privacy.
Please remember that the general rules of contract law applies, and if you are sending newsletters or subscription based information, ensure you are not breaching any Spam Laws, in addition if you payment gateways check and discuss your rights and obligations under Electronic Transactions Act (if in doubt seek professional advise).
Since the law interpreting the enforceability of online agreements continues to evolve, companies that want to create binding agreements with their online customers still face significant challenges. While the enforceability of an online agreement ultimately depends on the particular circumstances of that transaction, companies seeking to improve the likelihood that their current online agreements will be upheld should consider the following recommendations.
