Dropbox launched its revolutionary cloud-based file
hosting service in 2009 and unsurprisingly over 200 million users
have flocked to it. In legal-speak that means they've also
agreed to Dropbox's Terms of Service. Most online
businesses' T&Cs say they can vary their terms whenever
they like. In the past this has been controversial (remember
Instagram's grab for control over images uploaded on the
For those paying attention over the weekend, Dropbox sent you an
email announcing it is changing its terms of service from 24 March
2014. One of these changes is that any disputes between you and
Dropbox will now be subject to arbitration in the U.S under the
laws of California.
Fine, if you're American. But if you're a consumer or
business in Australia, then not so good. It's a long long way
If you're a business operating anywhere in the world, but
offering services to consumers in Australia, then all your terms
and conditions need to comply with the Australian Consumer Law
(ACL). In particular, you can't put 'unfair' terms in
your standard form agreements with consumers. Those are the sorts
of terms that create a 'significant imbalance' in the
relationship between the parties, and are particularly onerous,
without protecting a 'legitimate interest' of the
So is it fair for Dropbox to unilaterally impose US arbitration
Probably not. Why? Because removing a dispute from the
supervision of the Australian courts can deprive a consumer of the
protection of the ACL. We think that Australian courts won't
Businesses like limiting their exposure to being sued in foreign
jurisdictions. That is hard if you're an online business
offering your services to consumers around the world. Consumers in
each jurisdiction might be able to take you to court in their home
jurisdiction – no matter what your terms and conditions say
about it. So, if you're selling to consumers in Australia,
assume that Australian law will apply.
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The Sportscraft refunds and returns policy limitations went beyond consumer's rights under the Australian Consumer Law.
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