Enforceable Contracts
Many believe user agreements are not binding, however there
have been several cases which state that "clickwrap"
the agreements are binding under certain conditions. The term
"clickwrap" has evolved from term "shrinkwrap"
which describes the agreements in shrunken font size which
wrapped around software disk boxes or envelopes. Based on
current case law, for clickwrap agreements to be binding,
the user must be forced to view the agreement, take some action
to agree to it and be prevented from proceeding with use if
the user does not agree, and have an option to return or end
use of the product and receive a full refund.
As a binding contract, a user agreement offer a contractual
remedy against the user for failing to comply with any provision
in the agreement. This is in addition to any other legal remedies
that may be available, such as copyright law. Also, the agreement
can determine the venue for any litigation which can save
future costs if disputes arise. A Website Forms set, including
User Agreement, Site Submission Rules and Privacy Policy,
are available for purchase from the author here.
Two warnings however. 1) What law will apply, where the case
will be litigated and whether the contract will be binding
is determined on a country by country basis, wherever a user
chooses to bring the case to court. Therefore, international
use of your site, products and services also increases your
risks and costs of future litigation, so be sure that your
revenue justifies these unknown risks. 2) Persons under 18
who agree to contracts can be released from obligations under
them, so it is best to set up your user agreement as part
of a credit card or other process which ensures that users
are over 18.
Agreement Terms
Who Can Use the Site and How
A user agreement should set forth both who can use the site
and permitted uses, such as the following:
- That the users are over 18. This can ensure that the user
is either over 18 and bound by the contract, or supervised
by a parent who agrees to the contract and the minor's use.
It is important to be aware that the FTC has regulations
regarding collection of information from minors which also
apply to your website.
- That the user is truthful in information disclosed on
the site and agrees to what he or she is buying and to pay
for it. This can provide a remedy against the user if fraudulent
credit card information, contact information or other information
is provided, or if the user disputes the charge later. Threat
of litigation regarding the agreement can some times result
in faster resolution of payment disputes.
- That the user agrees not to copy materials on the site,
not to reverse engineer or not to break into the site, and not
to use the website materials, products or services for illegal purposes.
- That the user agrees to use the site as per the instructions,
not to disclose his password to others for use, and that
the site has a license for use of anything the user submits
or posts to the site.
- That the use of the site is at the discretion of the company
and that any use by anyone may be terminated by the company
at any time.
Statement of Any Purchase Policies
The user agreement should obtains the user's agreement to purchase policies regarding
the purchase, including warranty, shipping, returns or otherwise,
and the user's agreement to such policies. It is important
to be aware that FTC regulations and other laws govern sales
of products over the internet, as they do mail order and store
purchases.
Waiver of Implied Legal Warranties
The user agreement can also serve to waive legal warranties
which are implied by law regarding the sale of products under
the Uniform Commercial Code. Despite its name, the uniform
commercial code varies by state, but generally is uniform.
The UCC implied warranties include the following: merchantability
(that the item will do what it is intended to), fitness for
purpose (that if the items fitness for a particular purposes
is stated, it will meet that purpose), non-infringement (that
the product does not infringe other parties' rights) and title
(that the seller owns what she is selling). These warranties
can be waived so that they do not apply through insertion
of waiver language as set forth in the UCC.
Liability Limits and Postings
The user agreement should also limit the liability of the
company for damages of all kinds regarding use of the site,
errors on the site, viruses on the site or products, failure
ot the site to operate, third party links, and any purchase
or service. This is an extremely beneficial provision to lower
risk, especially regarding purchases and postings on the site.
Site postings can have a lot of liability associated with
them. It is important to limit your liability if users may post materials that are libelous, obscene
or infringing of a copyright or trademark. Sites can be legally
liable for these postings. Therefore, it is vital to incorporate
site submission rules and the liability limit into the user
agreement, which anyone making or viewing postings must agree
to. It is also helpful to include a provision which permits
disclosure of user information to law enforcement authorities
or as a result of subpoena. In some cases, users have sued
to prevent disclosure of such information by sites.
Indemnification
The user agreement can require that the user indemnify the
company for any claims resulting from such user's use. This
means that if the company is sued due a user's actions, the
company has a legal remedy to sue the user and require the
user to pay for any costs that the company is forced to pay
from such a claim.
Conclusion
A user agreement can offer tremendous legal benefit both
in lower risk and ensuring remedies for websites. You can find free sample terms and conditions of purchase and small business terms and conditions of purchase on web, but you are taking a risk in not using terms you acquire from a quality source. A Website
Agreement set, including User Agreement, Site Submission Rules
and Privacy Policy, are available for purchase from the author
here.
1 Readers are cautioned not to rely
on this article as legal advice as it is
no substitution for a consultation with an attorney in your
state. Based
on jurisdiction and time, the law varies and changes.
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