Are Your e-Commerce Terms and Conditions Enforceable?

This post was written prior to our January 2017 merger, under our previous firm name, MacPherson Leslie & Tyerman LLP.

We have previously written about the need for carefully-crafted terms and conditions for e-commerce websites. However, the best user agreement is of little value if it is not enforceable. There are many grounds upon which a court may find that all or part of an e-commerce agreement is unenforceable. One such ground that can be easily avoided, and which is the focus of this post, is lack of notice of the terms and conditions.

Bringing the Terms to the User’s Attention

There are three basic ways of bringing a contract to a user’s attention on a webpage.

  1. Click-wrap – The user must express their consent to the terms of the contract by clicking a link or a button (e.g. “I Agree” or “I Accept”). These are commonly used when users create an account on a website and immediately prior to a user completing an online purchase. In general, click-wrap agreements are an effective means of providing notice under Canadian law.[1]
  2. Click-wrap with Link to Terms – This approach involves having the user click a link or button to confirm acceptance but, instead of displaying the entire text of the terms, the user is provided with an opportunity to link to the terms on a separate page.
  3. Browse-wrap – The agreement appears on the webpage but the user is not required to express their consent, except by continuing to use the webpage. The “legal” section that appears on many websites is an example of a browse-wrap agreement. Canadian courts have been generally willing to find that browse-wrap agreements are sufficient notice[2] but some courts in the United States have not.[3] For that reason, there is some uncertainty as to whether all browse-wrap agreements will continue to be found enforceable in Canada.

E-commerce websites will often blend these approaches to help ensure that there are multiple opportunities for the user to review the agreement.  One example of this type of “blended approach” is as follows:

  • When a user creates an account, they are prompted to scroll through and click “I Agree”.
  • Before a user can complete an individual purchase, they are prompted to again actively agree to the terms (and the terms are provided by way of a link to a separate page).
  • The terms are always available in the footer of the website or the footer of the mobile application under “terms” or “legal”.

By using all three approaches in concert, the risk of unenforceability due to lack of notice can be minimized.

Other Ways of Promoting Enforceability

There are several other ways businesses can improve the likelihood that users are aware or ought to be aware of the terms of a contract including:

  • Setting out the terms of the contract in clear and unambiguous language.
  • Keeping the text size readable.
  • Placing key terms on the point of sale page.

If your organization is contemplating using online or mobile websites to sell goods or services we recommend that you seek the advice of an experienced legal advisor.

[1] See: Douez v. Facebook, Inc., 2014 BCSC 953 and Rudder v. Microsoft Corp., [1999] O.J. No 3778 (Sup Ct J).

[2] See: Century 21 Canada Limited Partnership v. Rogers Communications Inc., 2011 BCSC 1196.

[3] See: Nguyen v. Barnes & Noble, Inc., 763 F. 3d 1171 (9th.Cir. 2014) andIN RE:, Inc., Customer Data Security Breach Litigation, 2012 WL 4466660 (D. Nev. Sept. 27, 2012).