Are Website “Terms of Service” Enforceable Under California Law?

We live in a digitally connected world, and though the legal landscape has failed to adapt to the internet age in many cases, the application of foundational contract law to digital agreements has been relatively smooth and quite competent across jurisdictional lines, leading to somewhat uniform legal policy on digital agreements from state-to-state.

If you've spent any amount of time online (or even with offline software), you've almost certainly encountered a type of digital agreement known as a "Terms of Service" (TOS) agreement - or, alternatively, the "Terms of Use" - though it may not be immediately obvious to you just how wide-reaching these agreements can be.

Most web users ignore TOS agreements. When the agreement is hidden away in a separate hyperlink, the vast majority simply avoid reading through it. When the agreement is actually forced on the user, the vast majority simply click-through the confirmation screens without worrying about the content of the agreement. Users just want to get to the good stuff, and perhaps rightfully so! Online shoppers don't necessarily want to read about arbitration clauses and liquidated damages when they're just looking to purchase a new outfit or television set.

Of course, not all digital agreements - and TOS agreements, by extension - govern minor transactions. Depending on the nature of the website and your use of the website, the TOS agreement could apply to quite significant transactions involving goods and services worth millions.

The key to understanding TOS agreements is to understand that they are not necessarily unique in their formulation or their terms. TOS agreements can be as diverse as any other contract. One TOS agreement may require that all users accept that any potential legal dispute will be subject to mandatory arbitration, while another TOS agreement may provide for voluntary arbitration. The TOS agreement of a social networking site may force users to relinquish the copyright to uploaded artworks, while the TOS agreement of a different site may allow users to preserve their copyright as-is.

Terms of Service agreements may seem rather complicated at first, but in reality, the application of fundamental principles of contract law can help to clarify what is enforceable and what can be reasonably ignored.

Given the ubiquity and power of TOS agreements in the internet age, it's critical that businesses and persons conduct significant online transactions understand how courts across the United States have approached the issue of whether TOS agreements are valid and enforceable under the law.

As we proceed, it's helpful to assess and compare legal jurisprudence surrounding the two primary categories of TOS agreements, which the courts have termed "clickwrap" and "browsewrap."

A clickwrap TOS agreement is one in which the user is required to affirmatively acknowledge the TOS agreement, whether by scrolling through the agreement, clicking a confirmation box, or via some other method.

A browsewrap TOS agreement is one in which the user is not necessarily required to engage with the agreement. Instead, there is usually a hyperlink at the bottom or top of the page allowing the user to voluntarily read the terms of the agreement if they so choose.

The legal jurisprudence is quite different between clickwrap and browsewrap agreements, so let's take a look.

Browsewrap Agreements

The general trend across the United States has been for courts not to enforce browsewrap TOS agreements. Courts are hesitant to enforce browsewrap agreements as there are concerns relating to a foundational principle of contract law: that an enforceable agreement requires the consent of all contracting parties.

This is true in California, as well - the courts have found that, as a general rule, browsewrap agreements are not enforceable.

Pursuant to basic contract law, a party cannot consent to a contract for which he is unaware of the terms. If a website features a browsewrap agreement, assuming you have not followed the hyperlink and actually read through the browsewrap TOS agreement, then you cannot be held accountable to its terms. Generally speaking, the courts have found that users are notified of the TOS agreement (and can be assumed to have consented to the agreement) when they receive a textual notice or confirmation screen. A voluntary hyperlink will not suffice.

Clickwrap Agreements

By contrast, courts across the United States (and in California) have been far more willing to enforce clickwrap agreements.

Clickwrap agreements are often enforced despite the facts showing that the user has not read the actual terms of the agreement, which is typical, given that so few users read through TOS agreements. Courts have mostly found that - so long as a confirmation screen, a textual notice, or some other affirmative acknowledgement of the TOS agreement has been forced on the user - such confirmation is enough to make the terms valid and enforceable. Failure to read the terms does not affect enforceability in such cases because the terms are easily accessible and, as the Ninth Circuit federal court wrote, "within observation" for the user.

Mixed Agreements

On many websites, TOS agreements do not necessarily fit cleanly into either category. A browsewrap agreement that would otherwise be unenforceable may be deemed enforceable if, for example, the eventual purchase order screen contains a checkbox that forces the user to acknowledge whether they have read and consented to the TOS.

Similarly, not all clickwrap agreements provide users with standard methods of confirmation. A website that involuntarily prompts a user to enter their email to receive the text of the TOS agreement (but does not require the user to do so in order to proceed) is unlikely to be able to enforce their TOS agreement. In such cases, the courts may also assess user data to determine whether the nontraditional method was widely used - for example, if only 10% of users entered their email address to receive the TOS agreement text, then the court might find that the confirmation method was not sufficient to imply the user's assent.

Schedule a Free Consultation with an Experienced San Jose Contract Attorney

Here at O'Grady Law, we have represented a wide range of commercial clients in California breach of contract actions, including those that involve website TOS agreements. We have been located in the heart of Silicon Valley for over 35 years, and as such, we are well-equipped to handle disputes oriented around cutting-edge technological issues.

We understand that as the tech world evolves, so too must the legal enforcement mechanisms that govern it- after all, clarity of the law is fundamental to industry growth. We believe that by maintaining a close working relationship with our clients during litigation, we can help them better understand the process and accomplish their strategic goals.

Call (650) 318-6131 or submit a brief online form to get in touch with Attorney Brian J. O'Grady today for a free consultation and evaluation of your claims.