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Make your online contracts binding

Make your online contracts binding

What is the right approach?

How prominent do terms and conditions need to be on a website in order for them to be binding? What level of assent is required? Does a customer have to click “I agree” or “OK” to show they understand and agree to the terms of the agreement?

Most websites have terms and conditions of use embedded in them, but how they are presented on websites varies greatly. Sometimes the terms and conditions are presented by way of a tiny hyperlink at the bottom of the page next to the copy-right information. Other websites require users to scroll through the terms and conditions and to click “I agree” before entering the main site or using certain functionality on the site. Still, there are others who require users to register with their personal details and to agree to terms of use before gaining access to a website.

Often you will find lawyers and marketers at odds on how prominent the terms of use need to be.

Lawyers typically want the terms to be as prominent as possible and for a long list of information about the user to be entered before they can access the site. Marketers, on the other hand, typically want a smooth, sleek, easy-to-access site that is void of too much legal taint.

• What is the right approach?

A recent case in the Supreme Court of Canada has brought lawyers and marketers closer together on this front. Dell became subject of a class action law suit in the province of Quebec. Dell, however, claimed the class action was invalid as customers were bound by the standard terms and conditions posted on its website that provided for all disputes to be resolved by mandatory arbitration. The case came down to whether the customers were bound by Dell’s standard terms and conditions.

Each of the customers purchased a Dell computer from the Dell website. On each website page was an obvious hyperlink to “Terms and Conditions of Sale”. The Supreme Court of Canada found that the arbitration clause was no more difficult to access than if each customer had been given a paper copy of the contract and that the contract was therefore binding.

• What about New Zealand?

That specific point has yet to be tested in New Zealand. However, in the 2006 case of ‘The University of Auckland v The International Education Appeal Authority and Lisa Ann Summers’, the New Zealand High Court considered whether posting documents on a website constitutes “providing” those documents. In that case the university was required by statute to supply a copy of certain conditions to Lisa Summers prior to entering into a contract.

According to Justice Venning, in “the 21st century” conditions of the type considered in the case could be said to be “provided” if they were available on the provider’s website. The judge’s decison was influenced by the fact that conditions in that case, were about the type of information people in the position of Lisa Summers would have expected to find on the provider’s website. Justice Venning also noted that the information on the website was easily and readily available to her.

This approach is consistent with the Dell decision in Canada and makes sense on a practical level. Users of the internet are now familiar with the use of hyperlinks and are also generally aware that the terms of the website will be available on the website.

• Binding online terms and conditions

If they are the kind a user would expect to find on the website, it may be that putting a hyperlink in a prominent place on the site is enough. If, however, your terms and conditions try to do something that is beyond what the typical user might expect, it would be prudent to ensure you have obtained specific agreement to those terms.

Heidi Leslie is a Senior Associate with law firm Bell Gully. She specialises in technology and commercial law. She can be reached at heidi.leslie@bellgully.com

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