Law Times

PAGE 12 Uncertainty over 'browse-wrap' agreements accepting party is given an op- portunity to read and expressly accept or decline the contract, typically by clicking "I agree" — are generally considered to be enforceable, says Wendy Gross, there are still uncertainties as to the enforceability of other forms of online contracts, such as "browse-wrap" agreements. "The more difficult ques- 'Click-wrap' online contracts generally considered enforceable W BY DEREK HILL For Law Times hile so-called "click- wrap" online con- tracts — where the A soon-to-be-published study by the Canadian Inter- net Policy and Public Inter- est Clinic, at the University of Ottawa Faculty of Law, found multiple instances of so-called "unfair practices" in online contracts in the tele- communications, banking, and software industries. These included occasions tion," says Gross, of McCarthy Tétrault LLP, "which is still com- pletely unclear in Canadian juris- prudence — and the U.S. is all over the map on this — is when you talk about what they call web-wrap or browse-wrap agree- ments, and these are the ones that say, 'By using the site, or us- ing our services, you are deemed to have agreed to the terms,' and it's incumbent on the user to go and find those terms, which are sometimes deep in the site, and changed on a regular basis . . . and whether or not you can en- force a contract like that." Gross adds that if it's a busi- ness-to-business transaction then for the most part the courts would likely be inclined to up- hold it, as long as the terms of the contract were fair and reasonable — but that the real uncertainty lies in a consumer contract. "If you really want to be sure that you have something that's enforceable, you should be able to demonstrate that there was some sort of affirmative step on the part of the customer," she says. "We typically advise clients that anything that's more of a browse-wrap, it's questionable as to whether they'll be able to en- force that if they need to." when the terms and condi- tions of the agreement were not publicly available, when they could not be printed or saved by the consumer, when they were unnecessarily dense and confusing, and when the agreement was of a browse- wrap form and no effort had been made to ensure the con- sumer had read and agreed to the terms. This in spite of the fact of regulations such as s. 38(1) of the Ontario Consum- er Protection Act, under which the terms and conditions are required to be disclosed to consumers before they enter into any internet agreement worth more than $50. "[Some] businesses don't even bother putting all the terms and conditions up on the web for people to review . . . " says Philippa Lawson, director of CIPPIC. "It's not enough to provide it to the person who transacts, and it's certainly not enough to provide after the fact of the transaction. It needs to be provided right up front — and that's provided for in the Ontario legislation . . . but I'm not sure that that requirement is being respected and practised by all businesses." Lawson says that if the policy is "buyer beware" then the terms and conditions should be online and in a format such as click- wrap which forces consumers to read and agree to them — and she would even take it one step further. "From a policy perspective it would be much better if online businesses had consumers click 'I agree' to each separate clause which is both clearly disadvan- tageous to the consumer and not within the expectations of a reasonable consumer," she says, although she recognizes that there was no incentive for busi- nesses to do that, particularly when the huge pressure is to re- duce the number of clicks. "They'd have to be required to do that by legislation," she says. Gross cautions that the realities of online contracting have to be kept in mind. "If you think about where we're going in the wireless world, it's really difficult if you're presented with long sets of licence terms that you have to accept on your hand- held. The anecdotal evidence is that customers are just de- clining to buy things rather than go through that hassle in the context of terms being presented on their phone or on a PDA like a BlackBerry. So if they want to download a ring tone or play a game, or get some application onto their phone, and they're go- ing to have to scroll with their thumbs through pages and pages and pages on the screen, you know — lots of custom- ers will just say, 'Forget it, it's not worth the effort.'" While acknowledging that consumers for the most part don't even read the contracts, Lawson says that if every term that was "detrimental to con- sumers and would not reason- ably be expected" was required to be separately agreed to, such as the aforementioned liability limitation clauses or unilateral change clauses, it would create a strong disincentive for the com- panies to throw these arguably unfair terms into the contracts in the first place — and create a marketplace for companies to compete for consumers on the basis of these "hidden" terms. "Consumers are not going to like having to go through that, and every extra click is a lost sale, a number of lost customers for an online company. To the extent that they are required to get a click agreement for all sorts of terms which they don't need to include, they're going to start rethinking whether it's in their interest to include those terms in their contracts," says Lawson. That would — in theory — probably enhance the enforce- ability of the agreement, says Gross. "If you built that into your process, it would probably help you enforce it, if you were in a dispute. But I can't think of any clients or any sites that I've ever been to that have built in that extra layer of protection." However, despite its legal advantages and advantages for consumers, she warns that legis- lators should remember there are consequences of overly protective consumer-protection legislation. "If it's extremely expensive for the businesses to re-engi- neer their processes, that cost is going to get passed on to the customer. And similarly, if it's completely inconvenient for a business, it becomes really oner- ous in many cases for the user, and that's really not what a user wants. So it's really important for the consumer-protection legislation to take into account what makes the most sense practically in terms of what us- ers want, how users use the in- ternet, and how businesses need to deliver those services to make sure it strikes the right balance between business practicality and consumer protection. And I think that there is that line to be drawn — it can be done." LT Top expert guidance, tips, techniques and sample agreements to help you guide your clients on all aspects of outsourcing arrangements JULY 28/AUGUST 4, 2008 / LAW TIMES Want one? Here's a chance to win your very own iPod touch MSRP $319 It's this easy... Visit www.canadianlawyermag.com/surveys Complete our reader survey before August 15, 2008. Enter for a chance to win your own iPod touch! 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