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Effect of change-of-terms provisions on the enforceability of online terms of use : USA perspective

August 01, 2021
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This article has been written by Niketa Chitnis, pursuing a Diploma in Advanced Contract Drafting, Negotiation, and Dispute Resolution from LawSikho.com

Introduction

Every time you access a social media account or use a website or mobile application, you are bound by the terms of such social media platforms or websites. We are very well aware that such online terms of use or terms and conditions for usage of such platforms are one-sided in the favour of the owner/ developer of such platforms. You cannot access such platforms without accepting such terms and conditions. Terms and conditions to access online platforms usually include a condition reserving the right of owner/ developer to review or change any of the conditions at any time and the user on continuing its use assents its acceptance to such changed terms and conditions of the online platform. In this article, we will see the validity of such change in online terms and conditions in a court of law from the USA perspective.

Online terms and conditions

The effect of change of online terms and conditions on its enforceability is based on these three types of website agreements:

  1. Browsewrap agreements: These agreements have their terms on the website itself. They do not ask you for prior consent. According to Browsewrap Agreements, you simply accept the terms and conditions of the website by continuing to browse the website. For browsewrap agreements, you can continue to browse the website without reading or visiting the actual terms and conditions. Many times users are unaware of the existence of such a page containing terms and conditions for the usage of the website.

Eg: Wikipedia, in this you accept their policies simply by browsing their site.

2. Sign-in wrap agreements: With these agreements, you are notified about the existence of the terms and conditions of the website at the time of signing in and are advised to accept the terms and conditions while registering/ signing up to the site. Users are provided with a hyperlink to the page containing such terms and conditions.

Eg. Gmail, to open a Gmail account one needs to accept its terms and conditions, and the link is provided for the same while signing in.

iii. Clickwrap agreements: These agreements are different from the above agreements, they are designed to ensure that the user has a chance to read the given terms and conditions and they agree to such conditions after being fully aware of them.

Eg. Clickwrap agreements are often used for downloading or installing software. Such agreements are commonly set up through a series of pop-ups on the website. This requires a user to agree to the terms and conditions of the website by clicking the box for “I agree” or “I accept” after they are presented with the terms and conditions or a link leading directly to such terms and conditions.

Legal enforceability of website agreements

Since these terms and conditions are actively agreed upon by the user before any action is taken by him, clickwrap agreements hold better legal enforceability. Sign-in wrap agreements are fact-intensive depending upon whether the user has prior knowledge about the terms and conditions of the website, before continuing to use the site. However, in the case of browsewrap agreements, any action is not required on the part of the user to continue usage of the website. It means the user does not actively accept the terms and conditions of the website after being fully aware of the same. Browsewrap agreements do not hold any strong legal enforceability, unlike clickwrap agreements.

Effect of change of terms provided on the enforceability of these agreements

Conclusion

As opposed to California and Illinois, Texas Law prohibits parties from retaining unrestrained right to unilaterally modify arbitration agreements retroactively and without notice. Such arbitration agreements are unenforceable. The majority of cases addressing the effect of change of terms provisions in online terms of use do so in the context of arbitration. A federal court applying Texas Law has held the unilateral modifications of terms and conditions that gave an unrestrained right to the operator, as void. As online terms and conditions are displayed on the website and the user agrees to them, with free consent along with a declaration of being competent to enter a contract, such terms and conditions are termed as valid contracts. Accordingly, users shall accept the online terms and conditions again in case of any modifications in the same.

References


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