Any Baltimore Small Business conducting sales online or transacting any business online should consider their terms of service (TOS), how they are constructed, and most importantly if they are enforceable.  Below your, Baltimore Small Business Lawyer has summarized an excellent article written by Jack Blum.  For the full text of the article, click here.

What is a Term of Service?

Terms of Service (TOS for short) are rules that one must agree to and abide by in order to use any service.  If you contract for movers, you buy a TV, you hire a lawyer, you are agreeing to certain conditions from the seller or provider (such as paying money).  You are also agreeing to certain refund policies, cancellations, damages, etc.  Usually, the fine print that most people don’t read.  Well, there are ways that the fine print is enforceable and ways it isn’t (in the online arena).

Legal issues with web based transactions and websites

There have been several court cases that describe issues with the presence of terms of service and how, if at all, the terms of service can be legally binding.  Just having a link to the terms of service on a website does not make them legally binding.  The terms of service must be agreed to by the user of the website or at the very least placed in a location on the website that is easily visible.

There are two ways a person using a specific website can agree to the terms of service.  One, which has been called “clickwrap” is when a person physically clicks “I agree” to the terms of service of the website before services are rendered.  A “clickwrap” agreement is the most concrete form of agreeing to the terms of service by a user of the website and lets the owner of the website have legal recourse in saying that the user of the website physically agreed to their terms of service.

The second way a person using a specific website can agree to the terms of service is a process called “browsewrap”.  “Browsewrap” is when a person using a website does not physically click on an “I agree” button, but essentially agrees to the terms of service by merely continuing to use the website.  Although this form of agreeing to the terms of service is not as concrete as “clickwrap”, some courts have found these agreements to be legally binding.

Moreover, one main issue with these agreements is where the terms of service are located.  One court case claimed that because the icon “download” was at the top of the page and the link to the terms of service were at the bottom of the page, the terms of service were not legally binding because the person would not know that there were terms of service at the bottom of the page and would then have to scroll all the way down the page just to see if there were terms of service. 

Some websites have tried to redesign their webpage and have been able to have their terms of service deemed legally binding.  One website, in particular, has put its terms of service directly next to where a user would input their contact information.  By putting the terms of service in a location that is clearly visible, the courts have allowed the terms of service to be enforceable.

For designers of websites, this presents a problem.  Does a person sacrifice the appearance of their website in order to put the terms of service in a highly visible place or do they hide the terms of service but risk the terms of service not being enforceable?  Even the size of the font, color, and exact phrasing may influence this.  The question must be handled by the owners of the business and the website designers on how to appropriately show the terms of service.

Baltimore Small Business Lawyer: Bottom Line

We would suggest having your webmaster design a clickwrap TOS if at all possible.  Clickwraps are concrete forms of agreeing to the terms of your sale (or service).  If you find yourself without terms of service or need to find a way to redesign your website to increase the enforceability of the same TOS, please don’t hesitate to call ENlawyers!