Online Contracting -- Getting It Right
May 9, 2017
John E. Ottaviani
Uber hasn’t done it. Amazon hasn’t done it. Barnes & Noble hasn’t done it. These big companies haven’t been able to figure out how to get a court to enforce their online terms of service. But there is no reason that your company cannot get it right.
It’s not rocket science. You just have to take traditional contract principles and apply them online. Yet, businesses (and courts) are still struggling with how to do this properly. Given that the consequences of not being able to enforce a contract can be disastrous for a business, you would think more effort and attention would be spent on applying these principles to websites. However, many businesses are still falling short.
What we tell clients is that, in general, courts use a four-part test to determine if a party has validly agreed to the terms of a contract (whether the contract is on paper or online): (1) is the user provided with adequate notice of the existence of the terms; (2) does the user have a meaningful opportunity to review the terms; (3) is the user provided with adequate notice that taking a specified action manifests assent to those terms; and (4) does the user take the specified action? However, as technology develops, courts are becoming more sophisticated, and are looking at not only the language of the terms, but also at the presentation of the terms and the flow of the screens in the online agreement process.
Recent cases involving Uber (there are many), Amazon.com and Barnes & Noble illustrate the problems that companies are having in enforcing their online terms.
Certainty is important in business transactions. It is not difficult to set up online Terms and Conditions that are enforceable if you pay attention to the rules and to the details. But not getting it right can cost a business many times more than the cost of getting it right. Just ask Uber, Amazon and Barnes & Noble.Return