- May 9, 2014
- Posted by: Seth Heyman
- Categories: Contract Law, Internet Law, Startups
A previous post discussed the enforceability of online terms and conditions. Requiring consumers to agree to a website’s terms and conditions before they can undertake an action online often creates a valid and enforceable contract. These type of one-sided “take it or leave it” agreements are known as adhesion contracts, and they are often enforceable regardless of how onerous their terms might be.
Companies are now starting advantage of the enforceability of their T&C’s by adding clauses that prohibit consumers from writing bad reviews about them. These provisions, are called “non-disparagement clauses,” and failure to read and understand them can cause serious problems for would-be online critics. In some cases, consumers are being sued by companies for posting bad reviews about them on sites like Yelp.com or RipOffReport.com, even if (and this is important) the reviews are accurate.
It is not surprising that companies are now including (and enforcing) non-disparagement clauses into their online T&C’s. Previous posts have discussed the power of online reviews (120 million people visit Yelp and rely on reviews to make purchase decisions), and negative reviews about a company (or an individual) can have serious consequences. The ultimate question is whether lawsuits based upon online non-disparagement provisions will hold up in court. Although several have been filed, they have not progressed far enough into the court system to become precedent.
Until the issue of their enforceability is determined, you may want to consider adding a non-disparagement clause into your company website’s T&Cs. There are few enough weapons at a company’s disposal to fight unfair reviews, and even if a gun isn’t loaded, waving it in someone’s face will probably discourage them from stealing your wallet.