Enforceability of Online Agreements

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Can accessing a public website give rise to the formation of a contract?  This was one of the issues in Century 21 Canada Limited Partnership v. Rogers Communications Inc. a decision of a Judge of the Supreme Court of British Columbia, September 2011.  The decision can be found at:

A contract has at its basic core an offer, acceptance and consideration.  Consideration is an exchange of money, money’s worth or something that has benefit or value (present or future).  In order to form a contract there has to be consensus.  Where consensus is not express, the intention behind whether or not there has been an offer, acceptance and consideration can be communicated by a party’s expressions or actions (or in some cases inactions or omissions).

For on-line contracts, when a service or benefit is offered subject to stated conditions, and a person chooses to take advantage of the benefit or service, then the person may have entered into an agreement. 

The question becomes whether or not the person has sufficient notice of the stated conditions, or terms of use or sale, in order to agree to them.  This can be determined by express agreement, such as when the user clicks an “I accept” box or button, and sometimes by implied conduct such as a person accessing deeper pages of a website after becoming aware of the existence of the conditions.

Actual reading of the terms and conditions isn’t required – knowledge or awareness that the terms or conditions exist and the choice whether or not to read the terms is often sufficient.

The terms and conditions have to be visible to the user – if they are not visible (for example are in small print at the bottom of a page that would not be seen without a user scrolling to the bottom of a page), then in some cases such terms have not been enforced.

There are a number of types of internet agreements including shrink-wrap, click-wrap and browse-wrap contracts.  For those of you who are unfamiliar with the terms, the Judge in Century 21 Canada Limited Partnership v. Rogers Communications Inc. (“Century 21”) defined them as follows:

Shrink-wrap agreements are found with software purchased in a package at a store.  As long as there is sufficient notice of the terms of the license to use (such as on the package, in the user manual, once the software comes up on the screen) prior to use, such agreements are effective when a person removes the wrapping from the package.

Click-wrap agreements are found with software or services purchased over the internet – and are found or effective when one clicks the “I agree” or “I accept” or similar button, and are generally effective whether this is done prior or after purchase.

For browse-wrap agreements, all that is required is for a person to use the product or services after becoming aware of the terms or conditions of use.  If a person is unaware of the existence of terms of use, such terms might not be enforceable.  Reading of the actual terms is not required, however.  At a minimum it is important for websites to display any terms and conditions of use so that they are obvious.  Better still, add an “I agree” or “I accept” button wherever possible.

In summary, this decision held that the act of browsing past the initial page of a website or searching a website may be conduct indicating agreement with the terms of use, if the terms are provided with sufficient notice (for example visible), are available prior to moving to another page (meaning prior to acceptance) and the terms clearly state that proceeding further is acceptance of the terms.

The Court did not deal with the reasonableness or sufficiency of notice in this case because the parties were both sophisticated entities, had actual notice and had agreed or conceded that the terms of use were reasonable. 

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