Description

Website Terms of Use

Website Terms of Use Preparation Form – We recommend that you gather the information in this form prior to accessing the online questionnaire.  Doing so will help you efficiently create your custom Website Terms of Use.

Summary

Website Terms of Use serve as a contract between the website owner and each website user. Website owners sometimes refer to Website Terms of Use as Website Terms of Service. Accordingly, site owners should post these Terms of Use on the website. Additionally, website owners include provisions in these Terms of Use that govern website users’ access to and use of the site. Therefore, in order to protect themselves, website owners should implement the Terms of Use in a way that makes them enforceable.

Details

Goals

Website terms of use aim to:

• Help the business that owns and operates the site minimize its potential liability to site users. In some cases, terms of use help minimize a website’s content and service providers’ potential liability to site users.
• Protect the intellectual property included on or accessed through the site. One example of this is to prohibit the unauthorized reproduction of material contained on the site.
• Ensure the site is not used in ways that may be harmful, including by prohibiting illegal or undesirable user behavior. Examples include:
  • using the site for illegal purposes;
  • introducing viruses; and
  • uploading illegal, infringing, or defamatory content.

The site owner typically drafts the website Terms of Use from their perspective and makes them non-negotiable. These terms of use are intended for use in conjunction with a Website Privacy Policy and Website Copyright (DMCA) Policy.

This Website Terms of Use includes typical provisions for websites operated by businesses for business or consumer end users. Many of the provisions included in these terms of use apply to a broad range of websites. Nevertheless, the site owner must carefully customize the website terms of use for each site. Certain clauses may not be appropriate as drafted for a particular site. Different or additional terms may be necessary for some types of sites, including sites conducting e-commerce, because certain industries and certain types of website activities may be subject to specific laws or create unique liability concerns.

Because many websites now have interactive features (including social media features), this Website Terms of Use includes basic provisions relating to interactive features and user-generated content.

Legal Issues

Contract Formation

Site owners must implement these terms in a way that forms an enforceable contract between the site owner and each user. Terms drafted this way help to ensure that users are legally bound by the terms of use. To form a contract, generally the user must:

• Have an actual or constructive notice of the terms of use.
• Affirmatively or impliedly assent to the terms of use.

The enforceability of individual provisions within these terms depends on applicable federal and state law. This includes traditional common law contract principles and federal and state consumer protection laws. This is also applicable, even if terms of use are generally found to form a valid contract with a user based on the principles of notice and assent. For example, courts have refused to enforce choice of law, forum selection, and mandatory arbitration clauses in online clickwrap agreements. In those specific circumstances, courts found that the provisions were unreasonable or violated public policy.

Clickwrap Terms of Use

Ideally, site owners should present site users with a copy of the site’s terms of use and require them to take some action to indicate that they have read and agree to the terms of use. Site owners should require this before allowing users to move on the site. For example, the site may require users to click on an “I Accept” button or check a box next to language stating that they have read and accepted the terms. This method of providing notice and obtaining assent is referred to as a click-through or clickwrap terms of use. If the user does not click the button or check the box indicating acceptance, the website does not permit the user to move through the site.

Courts have generally found that obtaining user assent to terms through a click-through agreement creates an enforceable contract. Site owners using this method also typically include a link to the terms on the homepage. Additionally, sites sometimes include a link to other pages of the site for easy reference by users.

Browser Terms of Use

Many websites merely make the terms of use available to users through links on the site’s home page. Sometimes, websites make the terms of use available through links from other pages of the site. However, such sites often do not require users to take any action indicating that they have agreed to the terms. The terms instead typically state that use of the site constitutes acceptance of the terms. Terms of use presented in this manner are typically referred to as browsewrap or browser terms of use. Courts have often found that browsewrap, or browser terms of use, do not create an enforceable contract. However, courts have consistently enforced browsewrap terms when presented with evidence that the user had actual knowledge of the terms. Examples of this include may knowledge through:

• A letter from the site owner.
• A prominent notice on the site stating that use of the site constitutes agreement to the terms.

Nevertheless, when there is no evidence of actual notice, enforceability turns on whether the user was put on inquiry notice. The courts have set the bar high for inquiry notice.

The most common basis asserted for holding browsewrap terms of use unenforceable is that the user did not have actual or constructive knowledge of the terms and therefore could not assent to the terms.

Case Examples

For example, one court refused to enforce an arbitration clause in an online retailer’s website terms of use. The court found that the user did not have actual or constructive knowledge of the arbitration clause because:

• The terms were only accessible through a link at the bottom of the homepage.
• The site did not prompt the user to review the terms of use.

The Second Circuit has similarly held an arbitration clause unenforceable where the online service provider sent it to consumers in a follow-up, either through a hyperlink or in the body of the email, after they enrolled in the provider’s service.

Clickwrap Versus Browser Terms of Use

Clickwrap terms of use therefore typically have a higher probability of being found enforceable than browsewrap terms. This is particularly important for websites with e-commerce, social media, and other features where enforceable terms of use may provide valuable protection against liabilities. For these sites, the site owner should require users to acknowledge they have reviewed and affirmatively agree to the terms of use and any other relevant terms before permitting them, for example, to:

• Make a purchase on an e-commerce site.
• Upload or post content using social media.

Enforceability

Click-Through Method Enforceability

When using a click-through method, to increase the likelihood of enforceability:

• Include a prominent statement on or next to the applicable button or check box stating that the user has read and agrees to the terms.
• If using a check box to indicate assent, do not preselect the box. Require the user to check the box affirmatively to agree to the terms of use before being allowed to proceed past the homepage or make a purchase.
• When dealing with consumers who may be viewed by the court as unsophisticated users, display the actual terms of use, instead of only a link to them, next to the button or check box. Consider requiring the user to scroll through the entire terms of use before being presented with the button or check box used to indicate assent.

Browsewrap Enforceability

For websites using browsewrap terms of use, to increase the likelihood of enforceability:

• Place the link to the terms of use conspicuously on the homepage so that it is visible “above the fold” (that is, the user should not have to scroll down the screen to see the link). Also, consider placing a link to the terms of use in the primary navigation bar of the site (that can be seen without scrolling) so that the link is both conspicuous and accessible from all relevant pages of the site.
• Next to the link, place a prominent notice that the terms of use govern the website and that use of the site constitutes acceptance of the terms.

If a site owner changes the terms of use, the site owner must give users notice of the change. This is necessary for the changes to be enforceable and is applicable to both methods. The site owner ideally should require users to accept the revised terms of use affirmatively through a click-through method the next time the user logs on to the site or, if applicable, makes a purchase on the site.

User-Generated Content

The terms of use for websites that include interactive features or allow users to upload or post content should specifically address the types of issues that may result from those features. User-generated content consists of content uploaded or posted by users. For example, websites should restrict the types of content users can post. Additionally, websites should limit the site owner’s responsibility for user-generated content and other interactive features.

If a website permits users to post content, the website owner should determine if it is eligible for and, if eligible, take steps to ensure it complies with the requirements of the safe harbors that protect online service providers under the:

• Digital Millennium Copyright Act of 1998 (DMCA) for copyright infringement resulting from acts of third-party users.
• Section 230 of the Communications Decency Act (CDA) for defamation and certain other torts resulting from statements published by third-party users.

Potential Class Actions Under New Jersey Consumer Protection Law

Site owners should be aware of the spate of class actions under New Jersey’s Truth-in-Consumer Contract, Warranty, and Notice Act (TCCWNA). The TCCWNA covers e-commerce terms and conditions for transactions or potential transactions with New Jersey consumers. Even if New Jersey law does not govern the terms and conditions, the TCCWNA still applies. Several pending cases also argue that the TCCWNA should extend to sites that are not clearly e-commerce sites.

The TCCWNA prohibits the inclusion of contractual terms that:

• Violate any clearly established:
  • state or federal legal right of a consumer; or
  • responsibility of a seller, lessor, creditor, lender, or bailee.
• Waive the consumer’s rights under the TCCWNA.
• Contain broad savings clauses (such as “void where prohibited”). These clauses do not specify which provisions are void, unenforceable, or inapplicable in New Jersey. This prohibition against blanket savings clauses does not apply to written warranties.

Recent litigation provides a few examples of standard terms that may violate the TCCWNA, including provisions that:

• Waive a consumer’s rights to attorneys’ fees or require the consumer to split litigation costs.
• Limit a business’ liability for personal injury or property damage that occurs on its premises.
• Indemnify a business against losses that occur due to its own negligence or recklessness.

Ongoing class actions may result in additional findings of unenforceability regarding specific contractual provisions under the TCCWNA. Counsel should carefully review these terms of use to ensure compliance with the Act and should consider moving any provisions addressing sale of consumer goods or services to separate terms of sale.

Assumptions

A broad range of websites can utilize the provisions in this Website Terms of Use. Nevertheless, site owners should carefully review and customize website terms of use to address the particular site’s features and content. This Terms of Use assumes that:

• The site owner is not, and the activities conducted on or through the site are not, subject to industry-specific rules or regulations. Some industries are highly regulated. Thus, site owners must customize the terms of use to comply with industry-specific laws and requirements. Examples of such industries include the banking and financial services industries.
• The site owner does not conduct e-commerce or otherwise charge users for access to the site or any information or services offered on the site. To the extent the site charges for access to certain services or conducts e-commerce activities, additional terms are necessary to set out how goods or services will be sold (dealing with, among other things, contractual procedures for placing and accepting orders, payment terms, risk of loss, delivery, cancellations, and refunds).
• The website is intended for and is primarily used by US users. If the website operates in more than one jurisdiction or is used by many non-US users, the site owner must determine whether it is subject to the laws of any foreign jurisdictions and, if so, take steps to comply with those jurisdictions’ laws. For example, consider whether the European Union General Data Protection Regulation applies to the website.
• The website includes or will include basic interactive features, including allowing users to upload, post, or transmit user-generated content.

Other Considerations

Website terms of use should be:

• Easy to read and understand by intended users of the site.
• Consistent with the website’s privacy policy and any other notices, statements, and representations on the site.
• Reviewed periodically and updated as necessary to reflect any changes in legal requirements, new features, or other changes to the site.

Companies that otherwise qualify as places of public accommodation should also ensure that their public-facing websites, including terms of use, comply with the Americans with Disabilities Act (ADA).