Enforceability and Pitfalls of Online e-Commerce Terms of Use

Despite website Terms of Use being ubiquitous, merely posting them on a site does not make them enforceable. Like any contract, there must be a “meeting of the minds” — i.e., an offer and clear acceptance— between the online platform and the consumer or other purchaser of goods or services through the site. But even where end users click on an “accept” button or link, particular provisions of terms of use may still be vulnerable to challenge as being unconscionable, both substantively or procedurally. Despite prior past decisions in multiple jurisdictions upholding properly worded and structured terms of use, we are now seeing increasing attacks on terms that severely limit users’ rights and shield providers’ liability.

Southern District of New York Judge Jed Rakoff’s recent decision invalidating an arbitration clause in Uber’s terms of use, is an example of what can happen when consumers’ key rights are being waived in terms of use that are buried multiple clicks away from a consumer’s starting point.  Recently, a spat of class actions have been filed in New Jersey under the New Jersey Truth-in-Consumer Contract, Warranty and Notice Act (“TCCWNA”), a law passed back in 1981 long before the Internet, challenging retail web site terms of use containing broad limitations of liability and other waivers of rights. 

This course, presented by Barry Werbin, senior intellectual property and litigation counsel at Herrick, Feinstein LLP, reviews the legal issues surrounding online contract formation and terms of use, reviews key cases addressing the enforceability of terms of use, examines particular clauses that are most vulnerable to challenge, and offers practical guidance to consider when drafting and enforcing online terms of use. There will be a particular focus on New York and California and the 2nd and 9th Circuits. 

1. Identify types of online contracts, including browse-wrap and click-wrap agreements
2. Formation of valid terms of use agreements and amendments
3. Collecting and preserving admissible evidence of end user acceptance of terms of use
4. Overview of particular clauses, including forum selection and choice of law, limitations of liability and arbitration waivers
5. Provide practical guidance to reduce legal risks in structuring and enforcing online terms of use