Are Your Mobile Application or Website Terms of Use/Privacy Policies Legally Enforceable?

By: Joseph P. Glackin

In this day in age, more and more businesses are utilizing websites and mobile applications as their point of contact with their target audience/consumers. This post will analyze some of the agreement types in which privacy policies and terms of use agreements are conveyed within the aforementioned mediums. In doing so, it will analyze the enforceability of these agreement types, and make a final recommendation on how businesses should protect the enforceability of their agreements with their users. However, before discussing the agreement types, it is important to first understand some of the underlying contract principles.

Fundamental Contract Principles

            An essential element under basic contract formation principles is a mutual manifestation of assent. Manifestation of assent describes words or acts that objectively show that there has been consent to a contract between parties. Where assent to terms is passive, the question of contract formation turns on weather a reasonable person would be on notice of the terms at issue. If a reasonable person was on notice but did not read the terms, a contract would still be enforceable.

Browswrap v. Clickwrap Agreements

A recent 2015 decision out of New York in Berkson v. Gogo LLC provided a comprehensive review of the law to date on both browsewrap and clickwrap agreements. In summary, browsewrap agreements are agreements in which a user accepts a website’s terms of use by browsing a site or using an application. Clickwrap agreements are agreements in which a user accepts a website’s terms of use by clicking an “I Agree” or “I Accept” button, with a link to the agreement being readily available. This case also helped establish a set of general principles for internet and mobile application contracts.

These principles being:

1)              Terms will generally NOT be enforced if (a) no evidence that the website user had notice of the agreement; or (b) a hyperlink to the terms is buried at the bottom of a webpage.

2)              Terms will be enforced if design or content of a website or application encourages the user to review the terms.

Browsewrap Agreements

Browsewrap agreements refer to a contract or agreement covering access to use of materials on a website or downloadable product such as a smartphone application. In most cases, websites typically have a hyperlink to their terms and conditions, and notify consumers/users that by simply using the website, running an application, or accessing information, a user is agreeing to be bound to the aforementioned terms.

If a user is agreeing to be bound to certain terms simply by using a website or an application, there is no manifestation of assent. In practice, this means that a user can continue to use an application or website without actually visiting the webpage of terms or even knowing that the terms are of existence. This is counterintuitive to a reasonable person having notice of the terms, and thus is hard to be held as an enforceable contract. Taking this into consideration, courts have generally come to a consensus that browsewrap agreements are generally only enforceable if users have both a reasonable notice of the terms and have assented to those terms.

Reasonable Notice of Terms

In the 2014 decision of Nguyen v. Barnes & Noble Inc. the court stated that the “validity of a browsewrap agreement turns on whether the website puts a reasonably prudent user on inquiry notice of the terms of the contract.” Courts tend to look at the design and content of a website or application and the agreement’s webpage in finding whether a reasonably prudent person would be on inquiry notice of the terms. In addition to the inquiry notice requirement, in Small Justice LLC v. Xcentric Venures LLC, a Massachusetts Court looked at the “conspicuousness and placement” of a link to the terms and conditions, and took “other notices given to users of the terms of use, and the website’s general design” into consideration to determine whether a reasonably prudent person had inquiry notice of the terms.

Assent to the Terms

In order for a court to infer assent and hold a browsewrap agreement as enforceable, an individual user or consumer may impliedly accept terms by their conduct (such as accessing the site or service), and purchasing a product or service from the website or application. Recent trends have pointed out that courts are more likely to enforce browsewraps against corporations and businesses, and are less likely to enforce against individual consumers.

Clickwrap Agreements

Unlike browsewrap agreements, clickwrap agreements require an active role by individual users, where a user has to click a box stating “I AGREE” after being presented with terms of agreement, but prior to downloading or making a purchase. This affirmative action of clicking “I AGREE” manifests assent. In most cases, courts have enforced clickwrap agreements. However, more recently courts have expanded the inquiry to look at whether the terms were reasonably communicated to the user (i.e. effectively fulfilling the aforementioned reasonable notice requirement). It has been noted that the box that a user has to click needs to be clear and concise, and that checking it constitutes assent to the terms. Simply displaying a “Download” or “Proceed” button is not sufficient. The court in Specht v. Netscape Communications Corporation, in the 2nd Circuit, stated “a consumer’s clicking on a download button does not communicate assent to contractual terms if the offer did not make clear to the consumer that clicking on the download button would signify assent to the terms.”

Scrollwrap Agreements

Scrollwrap agreements are clickwrap agreements with an added attribute. This attribute being that a user is presented with the entire agreement or terms of use and must physically scroll to the bottom to find the “I Agree” or “I Accept” button. This adds another layer of protection in making sure a user has reasonable notice of the terms, and thus makes the contract that much more enforceable. With this being said, courts tend to favor enforceability with scrollwraps, as notice is clear and assent is satisfied via clicking a certain box.

Recommendations and Best Practices

A. The Scrollwrap Agreement

            After much research, it is recommended that a company utilizing a mobile application should heavily side with cautionary measures. These cautionary measures are sufficiently fulfilled with the use of a scrollwrap agreement. As previously mentioned, in this approach a user has to confront an agreement, scroll down to the bottom of the aforementioned agreement, check a box agreeing to be bound, and click a button confirming assent to the contract.

B. “YES” Button in Response to Asking if User Agrees to be Bound

Another viable approach is being more user friendly, but is just as valid in proving explicit assent. In this approach users would be asked to click on a button marked “YES” in response to a statement asking if the user agrees to be bound by a unilateral contract such as “Terms of Use” and the agreement is presented to the user above the button in the form of a hyperlink.

For added protection, it would be recommended to mandate that a user, in some way or process, be unable to click yes unless they have successfully navigated to the hyperlink taking them to the terms of use page. However, this may frustrate users as it requires them to actually navigate to the hyperlink.