Site Use Agreements - Is Your Site Safe?

Readers are cautioned not to rely on this article as legal advice as it is no substitution for a consultation with an attorney in your state. Based on jurisdiction and time, the law varies and changes.

When people ask me what I do for a living, I answer "Internet law". This statement is always followed by the question "What's that?", whereupon I reply, "Do you know those agreements on Websites, which no one reads, but on which we all click 'I agree'? I write those." This always gets a laugh, but it's also true.

They're actually pretty handy, those agreements, and not just for helping you fall sleep as you try to read them!

Those agreements are called clickwrap agreements, terms and conditions, user agreements... but they all serve a similar purpose. The term "clickwrap" has evolved from the word "shrinkwrap" which describes the agreements in shrunken font size that are often wrapped around software disk boxes or envelopes.

Do They Work?

Nearly everyone I speak to thinks that clickwrap agreements don't work. Sometimes that's true. It depends entirely on how the agreement is presented on the Website.

Case law sets forth conditions under which these agreements are binding. If a Website presents the agreement in accordance with the guidelines identified by the cases, there is a very good chance that the agreements would be upheld by a court as binding.

So They Do Work -- But Why Do I Care?

A contract is an agreement between two parties. The parties can agree to almost anything that isn't illegal (you can't agree to sell your kid, commit murder or other stuff that's "against public policy"). So in a clickwrap agreement, you can set forth all the possible restrictions on the use of your Website, and the purchase of products or services through it.

You can lower your business risks by limiting your liability for things that you might be sued for, and you can accomplish other helpful objectives, such as waiving warranties that are implied by law into the purchase of products, and choosing the location for litigating disputes.

Note, however, these two caveats. Firstly, with regards to persons under 18 who use your Website: when persons under 18 enter into a contract, they have the right to "disaffirm" it -- which means that you may not be able to enforce a contract against a person under 18. Therefore, you may want to restrict the use of your site to persons over 18.

And secondly: consider persons in other countries. Keep in mind that there is a good chance that you will not be able to get a foreigner into court in the U.S. Also, if you're sued abroad by a user, the foreign judicial system may not uphold the U.S. contract, and may apply their own law instead -- even if the contract says that U.S. law applies.

Judges generally do not like to have to learn new law and will rarely make a legal holding that would require them to understand and interpret the law of another country.

Furthermore, keep in mind that US law restricts us from doing business with certain countries like Cuba, Iraq, Syria and others -- in fact, it's illegal to do business with some of them. Having persons in these nations make purchases or download software from your Website would almost certainly be considered "doing business" with these countries. It's also considered exporting, which is in some cases completely prohibited, while in others, it just requires an export license.

Clickwrap Agreement Terms

Useful clauses in a clickwrap agreement are:

Who Can Use the Site and How

• Agreement that the users are over 18. This can ensure that the user is either over 18 and bound by the contract, or supervised by a parent who agrees to the contract and the minor's use. It is important to be aware that the FTC has regulations regarding collection of information from minors that do apply to your Website.
• Agreement that the user is truthful in information disclosed on the site, agrees to what he or she is buying, and agrees to pay for it. This can provide a remedy against the user if fraudulent credit card information, contact information or other information is provided, or if the user disputes the charge later. Threat of litigation regarding the agreement can sometimes result in faster resolution of payment disputes.
• Agreement that the user agrees not to copy materials on the site, not to reverse engineer or break into the site, and not to use the Website materials, products or services to violate law.
• Agreement that the user agrees to use the site as per the instructions, not to disclose his password to others for use, and that the site has a license (permission) for use of anything the user submits or posts to the site.
• Agreement that the use of the site is at the discretion of the company, and that any use may be terminated by the company at any time.