Ignore at Your own Risk: Online Terms and Conditions are Enforceable

CheckboxMy rough guess is that one person out of 10,000 actually take the time to read the lengthy terms and conditions that they are required to accept before engaging in certain online activities, such as accepting an offer or joining a social network.

Although routinely ignored, those terms and conditions are most often enforceable, and are always to the benefit of the company that imposes them.  The following cases should serve as a clear demonstration of what happens when the acceptance button is pressed without reviewing the terms.

A California court recently dismissed a case brought against Facebook by a group of minors who claimed that the social media network used their names and likenesses in advertisements without their consent, and thus violated their right of publicity,  which is the right to control the use of their name and likeness.

Facebook argued the plaintiffs gave consent, based on the Facebook Statement of Rights and Responsibilities, the terms of which alerted the one person out of 10,000 who actually read them that Facebook reserved the right to use names and likenesses.  By proceeding to register on Facebook, the plaintiffs agreed to those terms. .

The plaintiffs then argued that the online agreement was void because they were minors. The court disagreed, however, stating that contracts with minors are not presumed void, and that minors may make a contract in the same manner as an adult.

Minors do have the right to back out of a contract up to the age of majority, but to do so, they must affirmatively state that they’re exercising that right. In order to do so in the context of this case, the plaintiffs had to discontinue using Facebook- which they did not.

Another case dealt with a former executive employee of Newell Rubbermaid who had been eligible to receive stock options for the past three years. In that third year, she accepted the options online, by clicking “accept” under a box displaying the terms and conditions of the option grant, which she naturally did not take the time to read.

That proved to be a serious mistake, as the option agreement she accepted had a non-compete provision, which was not in the previous agreements that she declined to accept.   By accepting the terms, the employee agreed not to solicit Newell Rubbermaid customers if she left for a new job, which she discovered the hard way after leaving the company for Newell Rubbermaid competitor.  She solicited her old customers, and Newell Rubbermaid filed a lawsuit to enforce its non-compete.

The employee argued that she was not bound by the non-solicitation provision, because that term had not been part of the option agreement in the two previous years, and Newell Rubbermaid was obliged to flag those new terms.

The court found Newell Rubbermaid was not required to flag the new terms, and the bold text alerting her to existence of the terms and conditions generally, coupled with notice that she would be bound once she clicked “accept” was all the notice required. The court agreed the method was not “the model of transparency and openness” but it was, evidently good enough.

The bottom line is this-  when a website operator requires you to accept terms and conditions before proceeding, it’s presenting you with a contract, and that contract is likely just as enforceable as one that’s printed out and signed manually.

Author: Seth Heyman
Seth D. Heyman is a California attorney with extensive experience in advertising and marketing law, corporate law, contracts, governmental regulations, international business, and Internet law. He has counseled numerous successful companies, both public and private, and was responsible for regulatory compliance, contract management, corporate governance, and HR best practices for multiple organizations in many diverse industries, including marketing, telecommunications, energy, and technology development. He offers insight and guidance on federal and state direct mail, TV, radio, telemarketing, and Internet marketing laws, as well as online promotions, Internet privacy, data protection regulations, and similar matters.
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