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Website terms and conditions after Zappos

                A recent trend in federal courts has been the refusal to uphold or enforce important legal clauses which are found in website ‘terms and conditions’ .  Websites such as Amazon, Zappos, and Overstock have been recent victims of this trend.   A change in website service methodology can mitigate the risks posed by these recent court decision.

               It is common practice for website owners to include terms and conditions associated with the use of their site.  While delivered in different ways, the legal ‘meat’ of these terms and conditions can determine legal liability, or the battle ground (venue) for any legal fight.  Zappos recently lost a legal battle to enforce its terms when sued over the loss of data of customers.  In ruling on the request of Zappos to enforce the arbitration provision contained in its website terms and conditions, the court noted that: "the advent of the Internet has not changed the basic requirements of a contract, there is no agreement where there is no acceptance, no meeting of the minds, and no manifestation of assent.  A party cannot assent to terms of which it has no knowledge or constructive notice, and a highly inconspicuous hyperlink buried among a sea of links does not provide such notice".  As a result, website administrators should consider active methods (e.g. "I accept") to advise users of the terms and conditions upon which the business intends to rely to enforce legal provisions including clauses on jurisdiction, forum, attorneys’ fees, and limitation of liability for the website owner.   

                There are two types of agreements that are routinely used on websites: “browsewrap” and “clickwrap” agreements.  A browsewrap agreement is merely posted somewhere on the website and the user has the obligation to review important terms if the user so chooses.  A clickwrap agreement forces users  to click on a button stating that they have accepted the terms and conditions of a website before proceeding any further.  Courts have routinely upheld clickwrap agreements even if the users fail to actually read the terms and conditions.  The rationale is that these users have actual knowledge that the terms and conditions exist, and that they are aware that they will  be bound by them.  If users choose to ignore the warnings, they do so at their own risk. 

                Alternatively, courts are reluctant to uphold provisions found in browsewrap agreements due to the lack of the requirement for any affirmative action on the part of users   The determination of whether such agreements are enforceable is made by reviewing evidence of whether or not users had actual knowledge of the browsewrap agreement.   Courts are deciding whether or not users have  reasonable notice of the terms located therein based on the fact that many websites contain an inconspicuous link to the terms and conditions. Often located either at the bottom or on the side bar of a website, the link to terms is usually in a font and size which are not prominent and may be easily overlooked.  The Courts have ruled in many instances that these links do not constitute constructive notice of those terms, and, therefore, users will not be bound by such terms.  

                All website owners should review their policies on how notice to a user of the terms and conditions is provided.   If a website does not require an affirmative acknowledgement of such terms, it must at the very least make the terms and conditions prominent enough to provide constructive notice to all users.  The failure to do so may subject the website owner to liability that it intended to disclaim, to the jurisdiction of various courts throughout the United States, to implied warranties, and to the different laws of various states depending upon where the user is located.          

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