Are Your Website's Terms and Conditions Enforceable?

A website's terms and conditions are, at root, a contract, and ordinary contract law applies to them. Every contract requires an offer, acceptance of that offer, and consideration in the form of an exchange of value. All three elements must be present for the agreement to be enforceable in court and for it to protect the company that drafted it.

In a digital context, two of the three are relatively straightforward. The offer is the terms and conditions themselves, which explain what the website or application does and what users can expect from it. Consideration is conceptually more elusive but is generally understood to be the value the website or application provides to the user.

Acceptance is where the analysis becomes difficult, and it is the element that business owners and website managers most frequently neglect. If a court is not satisfied that a user properly accepted the terms, there is no contract at all — not weak terms, but no agreement whatsoever. The same requirement applies to amendments, which is a point missed even more often than the original.

The 2011 British Columbia decision in Century 21 v Rogers Inc., 2011 BCSC 1196, remains instructive. The defendant had copied content from Century 21's brokerage website in breach of its terms of use. The principal question for the court was whether those terms were enforceable at all, given that users of the site were not required to confirm their acceptance through any mechanism. The court found that a contract existed, because the defendant had proceeded further into the website and thereby implied acceptance of the terms. The analysis, as the court framed it, turned on the prominence the site gave to the proposed terms and on the notice the user had regarding what they were agreeing to.

That is a narrow escape rather than a model to follow. There are three established approaches for companies seeking greater certainty.

The first is the click-wrap agreement. A pop-up appears for users on first access to the site, and for continuing users whenever the terms are updated, requiring them to take notice of the terms and click to indicate agreement. This is an effective means of removing any question about enforceability. It is worth repeating that updates must be handled the same way, because an amended contract must satisfy the same three requirements as the original in order to apply.

The second is the browse-wrap agreement, which requires no affirmative click. Acceptance is inferred from the user's continued use of the site or application after having been made aware of the terms. The difficulty here is establishing sufficient awareness, both of the terms and of any subsequent amendments. Whether awareness is adequate depends on the layout of the particular site, but the safest approach is to display notice of the terms in clear type, positioned where a first-time visitor will encounter it, typically near the top of the homepage.

The third is the scroll-through agreement, which requires the user to scroll through the entire terms and confirm acceptance at the end. This approach is becoming more common for obvious reasons: there can be no serious argument that the user was unaware of the contract in all its length and complexity and nonetheless accepted it. It offers the greatest protection and the poorest user experience, and the trade-off between the two is a commercial judgment rather than a legal one.

Which approach suits a given business depends on the site, its users, and how much work the terms are actually being asked to do. What is not optional is addressing the question at all. The effort invested in drafting careful terms and conditions counts for nothing if acceptance cannot be established when it matters.