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Online Agreements; Modifications

—Joshua J. Haberkorn

As companies increasingly rely on the Internet to reach new customers and clients, online agreements are becoming commonplace.  These agreements can cover critical terms between a company and its clients and customers, whether “terms of service”, “privacy policies”, “terms of sale” or otherwise.  Companies utilizing online agreements should be familiar with standard contract principles and avoid missteps that could render their agreements unenforceable.

“Clickwrap” and “Browsewrap”

Courts will categorize most online agreements as either “clickwrap” or “browsewrap” agreements. Clickwrap agreements require the user’s affirmative acknowledgment and agreement to terms before the user is allowed to continue to use the company’s websites or services.  Browsewrap agreements are often found on a separate web page and do not require a user to seek out this page to utilize the company’s websites or services.

Browsewrap agreements are typically found through a hyperlink on a company’s website (for example, a “Terms of Use” link posted the bottom of the homepage).  In general, courts are less willing to enforce browsewrap agreements against the users of a website or service, often finding that a particular user did not have actual or constructive knowledge of the agreement or did not unambiguously assent to its terms.[1] In certain jurisdictions, even a conspicuous hyperlink on every page of a website (in close proximity to relevant buttons), without more, could be found insufficient to show a user’s constructive notice of the agreement.[2]  In order to enforce the terms of a browsewrap agreement, most courts will require a company to demonstrate that a user had an independent knowledge of their terms.[3]

Clickwrap agreements will require a user to consent before continuing to use a company’s site or services (for example, a “pop up” on the screen requiring a user to click “I agree”).  Courts routinely uphold the terms of clickwrap agreements – by requiring a physical manifestation of assent of the user, a user is on notice of the terms of such agreement.

If a company hopes to be able to enforce the terms of its online agreements, clickwrap agreements are almost always preferable to browsewrap agreements.  If a browsewrap agreement is to be used, a company will need to ensure that users have actual or constructive knowledge of the agreement (i.e., a screen before an online checkout unambiguously reminding users to review the “Terms of Use”, etc.).

Modifying Existing Online Agreements

Once an online contract is established between a company and its users, issues with enforceability can arise when the company attempts to modify its terms.  Although a company may believe it has “reserve[d] the right to modify the terms at any time” within its online agreements, such modifications are unlikely to be enforceable unless the company can show that the user was on notice to and accepted the modification.  For example, the Ninth Circuit has refused to enforce modifications where a company attempts to impose a duty on users to continually check back on the terms of use or privacy policy for changes.[4]  Other courts have stricken entire online agreements as “illusory” due to clauses allowing the host company to modify the terms and conditions at any time.[5]  Alternatively, when modifications are implemented in a clickwrap format, courts are more likely to find that users have affirmatively consented and to enforce the terms of the modification.[6]

When drafting online agreements, it is best to avoid using language that implies that one party can make unilateral modifications to that agreement.  Companies should provide a procedure within the online agreement for modifications and follow the outlined procedure.  After making changes to an online policy or agreement, a company should consider utilizing a “pop-up” to notify users of changes to the policy and require affirmative acceptance to proceed.

The information in this article is for informational purposes only and does not constitute formal, legal advice.  If you have questions about your online agreements, consult with one of the attorneys from Roberts McGivney Zagotta LLC for advice.

[1] See Nguyen v. Barnes & Noble, Inc., 763 F.3d 1171 (9th Cir. 2014).  See also Fteja v. Facebook, Inc., 841 F. Supp. 2d 829 (S.D.N.Y. 2012); Berkson v. Gogo LLC, 97 F. Supp. 3d 359 (E.D.N.Y. 2015)

[2] See Nguyen v. Barnes & Noble, Inc., 763 F.3d 1171 (9th Cir. 2014).

[3] Id. at 1178; See also AvePoint, Inc. v. Power Tools, Inc., 981 F.Supp.2d 496, 510 (W.D. Va. 2013)

[4] See Douglas v. U.S. District Court, 495 F.3d 1062 (9th Cir. 2007); Rodman v. Safeway, Inc., 2015 U.S. Dist. LEXIS 17523 (N.D. Cal. 2015)

[5] See Harris v. Blockbuster, Inc., 622 F.Supp.2d 396 (N.D. Tex. 2009)

[6] See TradeComet, LLC v. Google, Inc., 693 F. Supp.2d 370 (S.D.N.Y. 2010), aff’d, 435 Fed. App’x 31 (2d Cir. 2011)