Another Court Declares Terms of Service Provisions Unenforceable – Are Yours?

Too many companies/lawyers treat website Terms of Service (TOS) as boilerplate agreements that no one reads. Many companies simply put a link at the bottom of the homepage. This approach continues to prove ineffective, as courts are more frequently refusing to enforce TOS absent properly drafted terms and a requirement that the user read and/or affirmatively accept the terms. In a recent 9th
Circuit Appeal
, the court ruled against Barnes&Noble stating that “where the link to a website’s terms of use is buried at the bottom of the page or tucked away in obscure corners of the website where users are unlikely to see it, courts have refused to enforce the browse-wrap agreement.”

The Court further held: “where a website makes its terms of use available via a conspicuous hyperlink on every page of the website but otherwise provides no notice to users nor prompts them to take any affirmative action to demonstrate assent, even close proximity of the hyperlink to relevant buttons users must click on–without more–is insufficient…”

The result in this case was that the court decided there was no binding agreement,
and therefore B&N could not enforce the arbitration clause contained in the TOS. However, in other cases, even more significant problems can arise. Similar problems can cause modifications to a TOS to be ineffective.

The bottom line is that if properly drafted and implemented, a TOS can provide significant protection for companies and can minimize legal liability to customers. If not, courts will likely not enforce those terms.

If you have not recently reviewed your TOS, you should have a lawyer do so soon.