A website’s terms of use are the rules that visitors must follow when using the website. However, to enforce your terms of use, they need to be properly drafted. Terms of use should set out terms such as:

  • prohibited conduct;
  • ownership of intellectual property (IP);
  • disclaimers; and
  • liability.

This article will explain the difference between terms of use and terms and conditions and explain how to enforce your terms of use.

Terms of Use vs Terms and Conditions

Terms of use are different from terms and conditions, which set out the contractual arrangement when the user purchases a product or service from your site. There is generally little question over whether terms and conditions are enforceable because there is an exchange of money for a product or service (and usually the user will have clicked a box to accept the terms).

However, the exchange of money is not necessary for a contract. A site’s terms of use are a contract, but making them enforceable depends on other factors.

Notice and Acceptance

There are two key issues at play when discussing whether terms of use are enforceable:

  • notice; and
  • acceptance.

First, whether a contract is enforceable depends on whether you provide reasonable notice to the user before the contract was formed. Secondly, ask yourself, did the other party accept the contract, and if so, how did they indicate this?

The most common way of entering a contract is through a signature. Generally, by signing a contract, you agreed to all its terms. E-Signatures are growing in popularity but are usually for digital documents such as PDFs. The more common way of representing your acceptance to online terms is by clicking the box that says “I Agree”.

Browse Wrap Agreements and Click Wrap Agreements

Terms of use are usually either drafted as a browse wrap agreement or a click wrap agreement.

Browse Wrap Agreements

‘Browse wrap’ comes from the idea that by browsing a website, you accept the terms of use and are therefore ‘wrapped’ by them. Establishing notice and acceptance, as outlined above, can be questionable for browse wraps. Generally, they are accessible via a hyperlink at the bottom of the site, so it is difficult to establish that this constitutes reasonable notice. You also do not need to sign or indicate acceptance – entering the site itself is acceptance.

Does this mean that you cannot enforce a browse wrap agreement? There is yet to be an Australian landmark case on this issue, so we do not have an answer. However, the threshold to enforce such an agreement would be high.

Click Wrap Agreements

Click wrap agreements are usually in the form of a dialogue box which the user has to scroll through. There is also an “I Agree” box which the user has to click before they can proceed.

In terms of notice, click wrap agreements usually constitute reasonably notice because they normally pop up automatically. Ticking “I Agree” can be a signature, and some click wraps do not allow you to click “I Agree” until you have scrolled to the bottom of the terms.

Based on this, it would be fair to say that click wraps are generally easier to enforce than browse wraps. But does this mean your terms of use are automatically enforceable if you provide notice? Enter the Uber case.

The Uber Case

Meyer v Kalanick is an American case where Meyer argued that Uber did not give him notice that their terms of use included his acceptance to an arbitration dispute clause.  

Imagine opening a door, only to find another door, and then one more. This was essentially Uber’s process for providing users with notice of their terms of use. Upon registration, Uber gave notice that its terms of use were binding, with a link to their terms.

However, Uber did not require you to click the link to proceed. And even if you did click the link, you had to click two more links to get to the terms. Once you finally got to the terms, they were confusing and unclear. The terms were full of legal jargon.

The judge ruled against Uber, holding that while Uber gave notice, it was not ‘reasonable notice’. Uber successfully appealed that decision, with the judge saying that it is the user’s responsibility to read the terms.

Key Takeaways

Effective drafting is critical to ensuring you can enforce your terms of use. You need to provide reasonable notice to your users. Your terms should be in plain English and users should have to scroll through them before proceeding. Use a blank “I Agree” box at the end of the terms that will only be clickable upon reaching the end of the terms.

If you would like assistance in drafting or enforcing your terms of use, contact LegalVision’s e-commerce lawyers on 1300 755 544.

Justin Ocsan
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