Are Terms and Conditions Legally Binding?

At some point most of us have clicked on the “I Agree” check box, indicating that we have read and agreed to the Terms and Conditions of a website. Are these terms and conditions actually legally binding?

Yes, Terms and Conditions are legally binding as long as they are presented to the user in an obvious manner and written in a specific way.

Lets delve a little deeper into what this means.

are terms and conditions legally binding
Are Terms and Conditions legally binding?

The Presentation of the Terms and Conditions Agreement

In order for the Terms and Conditions Agreement to be legally binding, they must be made obvious to the user. It is the duty of the website owner to do all that they can possibly do to ensure the terms and conditions are made visible to the user. Therefore adding a link to the Terms and Conditions Agreement in your website footer won’t actually cut it.

There are two ways that the Terms and Conditions can be presented in an appropriate manner to the user; clickwrap agreements and browsewrap agreements.

Clickwrap Agreements

A clickwrap agreement is an online contract between the website and user. The Terms and Conditions Agreement is presented to the user and they need to click the “I Agree” or “I Accept” button to continue. The clickwrap agreement usually contains both a check box and a notice advising you that you are agreeing to the website terms by clicking the box. The user does have the choice to not agree to the Terms and Conditions but they will then no longer be able to use the service or purchase the product.

A clickwrap agreement allows contracts to be made online between the user and website owner, without the need for physical paper and pen.

Browsewrap Agreement

A browsewrap agreement is also an online contract between the website and the user, however unlike the clickwrap agreement, they require no action on behalf of the user. The browsewrap agreement is simply the use of the website means consent to the terms and conditions.

A browsewrap agreement is more likely to be enforceable if it complies with the following:

  • it is located in a conspicuous manner, not hidden at the bottom of the page in the footer.
  • it’s easy to access
  • any hyperlink of the terms and conditions must take users directly to the Terms and Conditions agreement
  • and it clearly tells the user that their continued use of the website acts as an agreement to the terms and conditions laid out in the Terms and Conditions agreement.
  • The Terms and Conditions must be in a readable sized font of a minimum of 12 point.
  • the website reminds the user to read the terms of service before they make a purchase of goods or services on the website.

The Clauses of the Terms and Conditions Agreement

The Terms and Conditions Agreement cannot be vague in how it makes changes to it’s agreement, if it is to be considered enforceable. It is not enough to state in the Terms and Conditions agreement that the website may update the terms and conditions from time to time and that the user therefore needs to check in on them every so often.

You must add a clause which informs your users of how you will notify them if you make any changes to the Terms and Conditions agreement. You may choose to inform them via e-mail, or put a notice on your website that changes have been made, the choice is yours, but it must be obvious.

Elements of an Enforceable Contract

In order to enforce your website Terms and Conditions your contract must include all required elements of an enforceable contract, which are:

  1. The offer: this is the beginning of the contract and is the proposed arrangement between the parties. This should include the defining terms of the contract.
  2. Acceptance: The acceptance needs to be communicated from the website to the user, that by continued use of the website, they are agreeing to the terms and conditions laid out.
  3. Consideration: The website and the user are exchanging something of value with one another. In majority of cases this will be a product or service in exchange for money.
  4. Competence/Capacity: The user must have the ability to enter into a contract and this most commonly refers to age. Persons under the age of 18 are too young to enter into a contract.
  5. Mutual Consent: The user must freely consent to the contract.
  6. Legality: The terms and conditions agreement will only be enforceable if the activity of the website is legal.
  7. Written: The Terms and Conditions agreement must be made in writing.

Takeaways

To help your Terms and Conditions be enforceable for website owners are as follows:

  • be explicit: provide all essential information (and more) in a clear, easy to read manner.
  • elements of an enforceable contract: ensure your terms and conditions includes all elements of an enforceable contract.
  • be conspicuous: place your Terms and Conditions agreement in a noticeable place.
  • consider a clickwrap agreement: have your users consent to having read and agreed to your terms and conditions before continuing with their purchase or use of your website.
  • changes to the contract: include how you will notify your users of a change in the terms and conditions, in the Terms and Conditions contract.

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