I work with website designers a lot -- making sure that the
Customer Agreements of my clients are presented as part of
the registration process in a way that's legally
enforceable.
One of the key components of your basic website legal
compliance documents is your Customer Agreement (which may
have many different names such as Membership Agreement,
Subscription Agreement, Terms of Sale, Content License
Agreement, etc.).
Some of my clients think that their Customer Agreement will
be enforceable solely because of legal mumbo jumbo I put in
it. Not true! Proper presentation during your registration
process is also a key to enforceability. If the agreement
is not presented properly, it will not be enforceable.
And as I point out to my ecommerce clients and their
website designers... if your Customer Agreement is not
enforceable, then all of your carefully worded disclaimers
and limitations of liability will be ineffective. The
result -- you would be exposed to substantial liability.
Specht v. Netscape Comms. Corp
A good example of a click-wrapped agreement that was
presented improperly can be found in the case of Specht v.
Netscape Comms. Corp., 150 F. Supp. 2d 585 (S.D.N.Y. 2001),
aff'd. 306 F.3d 17 (2nd Cir. 2002).
In the Specht case, Netscape's website developer designed
its download page for Netscape's SmartDownload software
with little regard for contract enforceability.
Netscape's download page provided a download button which
downloaded the SmartDownload software. The only reference
to a license agreement required the user to scroll to the
bottom of the same web page which provided a link to the
license agreement. Clicking on this link directed the user
to another page which stated that use of the software was
governed by a license agreement that required still another
click before the user could read the contract terms.
The 2nd Circuit ruled that Netscape's agreement was
unenforceable because of 3 deficiencies:
* the user did not have to click on an "ACCEPT" or "I
AGREE" button to indicate assent; * the text on the web
page accompanying the download did not clearly state that
agreement was a pre-condition to use; * the failure to
provide "reasonable notice" of the existence of contract
terms.
Lessons Learned From The Specht Case
Lessons learned from the Specht case involve 2 basic
methods of successfully incorporating your Customer
Agreement into your website - the full page method and the
scroll box method.
The full page method is the most conservative method. This
method requires the placement of the "I AGREE" button at
the bottom of the page containing the contract terms
(thereby requiring the user to at least scroll to the
bottom of the page to click).
The scroll box method requires the placement of the "I
AGREE" button on or in close proximity to a scroll box
containing the scrollable contract terms coupled with
visible explanatory text providing notice of the contract
terms.
Most website designers prefer the scroll box method because
it uses less space. If you use the scroll box method, this
is a summary of the 5 tips for enforceability:
1. conspicuous presentation during registration process -
the scroll box with the agreement should be presented
conspicuously during the registration process;
2. reasonable notice of the existence of contract terms -
this is the purpose of the text that is in all caps at the
very top of the agreement (ABC COMPANY IS WILLING TO GRANT
YOU RIGHTS TO ESTABLISH AND USE AN ACCOUNT WITH THIS SITE
...);
3. unambiguous manifestation of assent - this is the
purpose of the ACCEPT button - place both the ACCEPT and
the DECLINE buttons on the scroll box just under the
scrollable window - set the default to DECLINE - make sure
that registration cannot be completed unless the ACCEPT
button is clicked;
4. opportunity to review contract terms - the scrollable
window should show some of the text of the agreement below
the notice section without the requirement of scrolling to
see it - the text should be in a legible font, clear, and
readable - the scroll box should permit the user to review
the contract terms easily at the user's own pace, and the
user should be able to navigate up and down through the
entire text of the agreement in the scroll box; and
5. opportunity to print agreement - the scroll box
presentation should clearly indicate an opportunity to
print the agreement.
Conclusion
Enforceable Customer Agreements are critical to controlling
your online business... and with it, your exposure to
liability. Although part of the issue of enforceability is
determined by what your Customer Agreement actually says...
a significant part is determined by how it's presented. So,
be sure to monitor how your website designer incorporates
your agreement into your site, and make sure it's done
right.
The future of your business may be riding on it!
----------------------------------------------------
Chip Cooper is a leading intellectual property, software,
and Internet attorney who advises software and ecommerce
businesses nationwide. Chip's easy and affordable online
contract drafting service coordinates website contracts
such as Terms of Use, Privacy Policy, Subscription,
Membership, and SaaS agreements. Visit Chip's
http://www.digicontracts.com/ site and download his FREE
report, "12 Sure-Fire Ways Your Website Can Get You Sued".
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