Business Law

Understanding Online Contract Provisions: Insights from Lerner & Weiss

In today’s online society, almost every website or app an individual uses contains Terms of Use, which necessarily include dispute resolution terms. But how many of us actually read these terms before purchasing a product online or using an app? Not many. However, it’s crucial to understand the potential consequences of such action. Are you going to be bound by these terms? What rights are you waiving? In fact, you are waiving plenty of rights and being bound by terms written by the website or app owner and provider. This lack of awareness can lead to unexpected and unwanted consequences.

Most of us so casually scroll over or completely ignore, the Terms of Use, not recognizing that we are creating a binding contract between us and a third party. In California, parties traditionally show their consent to agree by written or spoken word, but they can also do so through conduct. Such consent to the terms of an agreement may also result if that individual’s actions show that they intend to engage in the conduct and knows or has reason to know that the other party may infer from his conduct that he assents to the terms of the agreement. These elemental principles of contract formation apply equal force to online contracts. Thus, if a website offers contractual terms to those who use the site, and a user engages in conduct that establishes their acceptance of those terms, an enforceable agreement can be formed. 

To avoid the unfairness of enforcing contractual terms that consumers never intended to accept, courts confronted with online agreements have devised rules to determine whether meaningful assent has been given. If (1) the website provides reasonably conspicuous notice of the terms to which the consumer will be bound; and (2) the consumer takes some action, such as clicking a button or checking a box, that unambiguously manifests his or her assent to those terms. Therefore, if the website offers terms that are disclosed through a hyperlink, the user manifests assent to those terms simply by continuing to use the website.

For example, a California court found that where a website included an explicit notice on the final order review page, directly below key information such as the purchase total, and directly below the button the user tapped to complete his purchase resulted in the user’s manifestation of its consent to the Terms of Use, because the notice was on an uncluttered page and is not hidden or obscured. The notice was clear and legible, and the hyperlinked phrase “Terms of Use” was colored bright green—contrasted against the surrounding white background and adjacent black text. Moreover, the website indicated clearly that, by submitting an order, the consumer “confirms [he/she/they] is 18 years of age or older and agree[s] to our privacy policy and terms of use.” 

Therefore, the next time you casually scroll across the Terms of Use for a website or simply click that you “accept all terms,” be aware that you are doing more than simply saving time by not being ready for these usually lengthy terms, but that you may be entering into an enforceable contract written by, and for the benefit of a third party, which can have some unexpected and unwanted consequences. 

This is a true “buyer beware” situation.”

Understanding the implications of online contract provisions is crucial in today’s digital age. To ensure you’re fully informed and protected, call Lerner & Weiss today. Our experts can help you navigate the complexities of online agreements and safeguard your rights. Don’t wait—reach out now for professional guidance and support.