United States: Three Steps To Help Ensure The Enforceability Of Your Website's Terms Of Use

Last Updated: October 13 2015
Article by Aaron P. Rubin and Daniel Zlatnik

Operators of social media platforms and other websites typically manage their risks by imposing terms of use or terms of service for the sites. As we previously wrote, websites must implement such terms properly to ensure that they are enforceable. Specifically, users must be required to manifest acceptance of the terms in a manner that results in an enforceable contract. But what specifically constitutes such acceptance, and what steps should website operators take to memorialize and maintain the resulting contract? This article attempts to answer these practical questions.

Use Boxes or Buttons to Require Affirmative Acceptance

Website operators should avoid the cardinal sin in online contract formation: burying terms of use in a link at the bottom of a website and attempting to bind users to those terms based merely on their use of the website. Outside of some specific (and, for our purposes, not particularly relevant) circumstances, such approaches, often confusingly referred to as "browsewrap" agreements, will not result in a valid contract because there is no objective manifestation of assent. (Note, though, that even so-called browsewrap terms may be helpful in some circumstances, as we described in this post.)

Moreover, even website terms presented through a "conspicuous" link may not be enforceable if users are not required to affirmatively accept them. For example, in Nguyen v. Barnes & Noble, Inc., Barnes & Noble did include a relatively clear link to its website terms on its checkout page, but nothing required users to affirmatively indicate that they accepted the terms. The Ninth Circuit held, therefore, that Barnes & Noble could not enforce the arbitration provision contained in the terms. While the specific outcome in Barnes & Noble arguably is part of a Ninth Circuit trend of declining to enforce arbitration clauses on the grounds that no contract had been formed, nothing in the opinion limits the Ninth Circuit's holding to arbitration provisions. The case is an important cautionary tale for all website operators.

To avoid the Barnes & Noble outcome, website operators should implement two key features when users first attempt to complete an interaction with the site, such as making a purchase, registering an account, or posting content: (1) present website terms conspicuously, and (2) require users to click a checkbox or an "I accept" button accompanying the terms. The gold-standard implementation is to display the full text of the website terms above or below that checkbox or button. If they fit on a single page, that is helpful, but an easy-to-use scroll box can work as well. Website operators taking the scroll box approach may consider requiring users to actually scroll through the terms before accepting them.

Many website operators, however, choose not to present the terms themselves on the page where a user is required to indicate acceptance. Instead, they present a link to the terms alongside a checkbox or button. Courts have ratified this type of implementation as long as it is abundantly clear that the link contains the website terms and that checking a box or clicking a button indicates acceptance of those terms. This was essentially the implementation at issue in a 2012 case from the Southern District of New York, Fteja v. Facebook, Inc. Specifically, signing up for Facebook required users to click a button labeled "Sign Up," and immediately below that button was the text, "By clicking Sign Up, you are indicating that you have read and agree to the Terms of Service." The phrase "Terms of Service" was underlined and operated as a link to the terms. The court reasoned that whether the plaintiff read the terms of service was irrelevant because, for the plaintiff and others "to whom the internet is an indispensable part of daily life," clicking on such a link "is the twenty-first century equivalent" of turning over a cruise ticket to read the terms printed on the back. As sure as vacationers know they can read the small print on their cruise tickets to find the terms they accept by embarking on the cruise, the plaintiff knew where he could read the terms of use he accepted by using Facebook. The parties formed an enforceable contract once the plaintiff clicked the "Sign Up" button.

This reasoning, however, does not necessarily mean that an implementation like the one at issue in Fteja will always will result in an enforceable contract. Because it relied on the plaintiff's admitted proficiency in using computers and the Internet, the court likened the "Terms of Service" link to the backside of a cruise ticket. This leaves room to argue for a different outcome when a website operator should expect that novice computer users will be among its visitors. The simple way to avoid that (perhaps far-fetched) argument is to expressly identify the hyperlink as a means to read the contract terms. That approach succeeded in Snap-On Business Solutions v. O'Neil & Assocs., where the website expressly instructed users, "[i]mmediately following this text is a green box with an arrow that users may click to view the entire EULA."

These cases illustrate how important it is to expressly connect users' affirmative actions to the terms of use. In particular, the checkbox or button and accompanying text should clearly indicate that the user's click signifies acceptance of the website terms. The terms should be presented in a clear, readable typeface and be printable, and the "call to action" text should be unambiguous—not susceptible to interpretation as anything other than acceptance of the website terms.

Here are some examples:

  • "By checking this box ¨, I agree to the 'Terms of Use' presented above on this page."
  • "By clicking 'I Accept' immediately below, I agree to the 'Terms of Service' presented in the scroll box above."
  • "Check this box ¨ to indicate that you accept the Terms of Use (click this link to read the Terms of Use)." (In this example, the website terms would be presented through a link, as in the Fteja case. The added instruction, "click this link to read the Terms of Use," avoids any potential argument that a Fteja-type implementation only works where users can be assumed not to be novice computer users.)

Ensure You Can Prove Affirmative Acceptance

Even website operators that properly implement website terms often neglect another important task: making sure they can prove that a particular user accepted the terms. One common approach—to present declarations from employees—is illustrated in Moretti v. Hertz Corp., a 2014 case from the Northern District of California. The employees in that case affirmed via declarations that (1) a user could not have used the website without accepting the website terms, and (2) the terms included the relevant provision when the use took place.

The approach in Moretti, however, has a potential weakness: it depends on declarants' credibility and their personal memory of when the terms of service included certain provisions. Website operators can address that vulnerability by emailing a confirmation to users after they accept the website terms and then archiving copies of those messages. To limit the volume of email users receive, this confirmation could be included with other communications, such as messages confirming an order or registration. This approach has two benefits. First, the confirmation email provides further notice to the user of the website terms. Second, instead of (or in addition to) invoking employees' memory of historical facts to establish which terms were in effect at the relevant time, employees can simply authenticate copies of the messages based on their knowledge of the messaging system.

Provide Notice of Any Changes

Some of the most difficult implementation issues arise when a website operator wishes to modify its terms. Website terms often purport to allow the operator to change the terms whenever it wishes, but unilateral modifications may not be enforceable if they're not implemented properly because—like any other contract amendment—modification of website terms requires the agreement of both parties. Ideally, website operators should require users to expressly accept any changes or updates through a mechanism like the one used to obtain their acceptance of the website terms in the first place.

Many website operators, however, are understandably reluctant to add friction to the user experience by repeating such legal formalities every time they modify their terms. In those cases, operators should consider providing users with clear advance notice of modifications. Such notice could specify when the changes will go into effect and state that continued use after that date will constitute acceptance of the changes. For example, in Rodriguez v. Instagram, Instagram announced a month in advance that it planned to modify its terms, and the plaintiff continued to use the site after the effective date of the change. On those facts, the trial court found that the plaintiff agreed to the modified terms by continuing to use the service. While Instagram and other cases have indicated that unilateral changes require, at the very least, advance notice, other courts may be less willing to enforce unilateral modifications without express acceptance by the user, especially where the factual issue of notice is contested. Obtaining express acceptance remains the safest approach.

Following the above guidelines will increase the likelihood that courts will view website terms—and the important risk mitigation provisions they contain, such as disclaimers, limitations of liability and dispute resolution provisions—as enforceable contracts.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

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Aaron P. Rubin
Daniel Zlatnik
 
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