Online Contracts Are Valid (Everyone Knows That) – So Why More Litigation?

Only a few years ago, risk managers were concerned whether ‘click wrap’ or online contracts would create enforceable contracts. With laws and court cases over the years, the issue has been reasonably settled. They are. But the focus of recent cases has turned to the details—how is effective notice given online? Are there clauses or terms that require prominence to be enforceable? How can we determine if online formalities are sufficient for legal purposes? What about mandatory arbitration clauses? Are choice of law or choice of forum clauses enforceable? Are the assents necessary to waive one’s right to a jury trial or cut short the statute of limitations, the same as those prohibiting use of the website for illegal purposes? Can you bind a user browsing on the Internet to the terms of use when a website simply says “by browsing or visiting this site you must, and you agree to, comply with and be bound by our terms of use”? Do you always need the “I Agree” assent generally ascribed to contract formation. The answers are: it depends. Big surprise from a lawyer, right?

In general, common sense helps when creating online contracts (hiring a knowledgeable Rimon lawyer is good common sense). Ask some simple questions: (a) is your notice of terms reasonable and conspicuous, and can it be bypassed? (b) how do you know if a customer has agreed to your terms – by browsing, by clicking a link or by entering particular words of assent? (c) do the users have a choice if they don’t want to be bound by the terms – is it clear what they should do or not do? (d) are there laws that apply to your business, your industry or in jurisdictions you do business, that relate to online contracts? (e) is there a means to modify, terminate or otherwise alter the agreement—how will the customer know? and (f) keep records.

Some simple principles, but as you can appreciate, often easier to list in an outline than carry out in practice. And there are more. The cost of failure or noncompliance is high. Need to get it right? Call Rimon—we’ll help.