Are your online contracts valid?

"Sign-in wrap," "click-wrap," "click-through," or "browsewrap": Which type of agreement do you use for implementing your general terms and conditions into your online contracts? Or is it rather a "modified clickwrap" agreement? The nature of your online agreement determines the requirements for the validity of your general terms and conditions. You might want to choose wisely!

An arbitration clause is a common provision found in general terms and conditions. In general, arbitration was conceived as an informal, expedited process for resolving routine disputes between businesses. In a recent consumer class action case brought against Uber, the Massachusetts U.S. District Court held that the binding arbitration clause in Uber's Terms and Conditions was enforceable in an upset to driver efforts to secure the benefits and protections of employees in California.

In general, there are two main types of online agreements: "clickwrap" agreements and "browsewrap" agreements. The other types mentioned above are variations or hybrids of these two types.

"Clickwrap" agreements are online contracts in which website users are required to click on an "I agree" box after being presented with a list of terms and conditions of use. The Court mentioned that "clickwraps" are more enforceable than "browsewraps" because they allow courts to infer that the user was at least on notice of the terms of the agreement, and has manifested consent by clicking a box.

"Browsewrap" agreements are where the user does not see the contract at all but in which the license terms provide that using a website constitutes agreement to a contract whether the user knows it or not, or where the link to a website's terms of use is buried at the bottom of the page or in an obscure part of the website where users are unlikely to see it.

Uber used a "sign-in-wrap" agreement, which is a hybrid of aforementioned agreement types. This type of agreement does not have an "I accept" button or box and the user is not required to view the terms and conditions to use the related web service. These agreements typically make terms and conditions available by link and provide them through some type of subscription (registering or signing into an account), the user agrees to those terms and conditions. This means that according to Massachusetts law, proof of actual notice of the terms of the agreement are not required as long as a user has reasonable notice (i.e. by creating an account).

Companies are responsible in limiting risk and keeping their businesses running smoothly. In order to limit liability with respect to business websites and mobile applications, it is imperative to have strong, enforceable terms of service. However, a company's terms and conditions are only a powerful tool if they are actually enforceable. For more information regarding general terms and conditions, please contact BridgehouseLaw LLP.