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Your terms and conditions are an essential part of maintaining and running your online business. They protect your business against liability and define the legal relationship between you and your customers. However, most of the time, people will quickly click through your terms and conditions without reading them. Despite being such a crucial part of how online business functions, you may be wondering whether you can actually enforce your website’s terms and conditions against a customer if you ever needed to. In most cases, if you have drafted and displayed your terms and conditions properly, they are enforceable. This article explains what you can do to enforce terms and conditions against your customers.

What Is a Contract?

For a contract to be valid, you need to have three things:

  • offer: you offer your goods or services to a customer;
  • acceptance: they accept your offer for goods or services; and
  • consideration: the customer gives you something of value in exchange, such as a monetary payment.

When you are selling or operating your business online, your business terms and conditions act as a contract. This kind of contract is known as a: 

  • “standard form” contract; or 
  • “take it or leave it” contract. 

This means that you set the terms of the contract and the customer has to accept your terms, or else they cannot use your services. Online contracts are just as enforceable as paper ones. However, the way they function looks a little bit different. This is apparent when determining whether a customer has “accepted” your contract terms.

How Do My Terms and Conditions Function as a Contract?

Generally, there are two different types of terms and conditions, in terms of their applicability as a contract. These are:

  • browse-wrap; and
  • click-wrap.

When you use browse-wrap terms and conditions, you assume that a customer has accepted your terms by nature of their using your website. Usually, this means that you have hyperlinks to your terms and conditions located throughout your website and customers have to “browse” to find them. Customers do not actively agree to your terms and conditions.

Conversely, click-wrap terms and conditions require active agreement from your users. This generally means that your terms and conditions appear in a pop-up box or separate screen, requiring a customer to click a checkbox saying “I agree” to proceed.

Both kinds of terms and conditions are useful in different circumstances. For example, your website terms of use may require a browse-wrap agreement, whereas your more specific business terms and conditions would require a click-wrap confirmation of agreement.

Enforcing Your Terms and Conditions

There are many assumptions with this style of agreement confirmation. The enforceability of your terms and conditions is a grey area that depends on the context.

In most cases, a browse-wrap style agreement would not fulfil a contract’s requirements for acceptance because it lacks the active component that click-wrap has. A crucial part of ensuring that your customer has agreed to your terms and conditions is to make sure that:

  • they have actually seen them; or 
  • you can reasonably infer that they have. 

You can do this by:

  • forcing customers to scroll through your terms and conditions, followed by an “I agree” checkbox;
  • choosing a legible and easy-to-read font for your terms and conditions;
  • keeping your terms and conditions short and easy to read, with headings and bullet points;
  • highlighting any important or unusual points;
  • reminding customers that your terms and conditions are binding; and
  • requiring terms and conditions acceptance as part of using your site, for example, when they create an account or complete a transaction.

If you can reasonably infer that a customer has seen your terms and conditions and they have actively accepted those conditions, you should be able to enforce your terms and conditions against them. Whether they actually read your terms and conditions is up to them – you have done your part to create a binding contract.

Unfair Terms

You should also be careful when drafting your terms and conditions, to ensure you are fair and reasonable with what obligations you impose on the customer under contract law. A court can rule a part of your terms and conditions unfair if it:

  • causes a significant imbalance between you and your customer’s rights and obligations;
  • is not reasonably necessary to protect your business’s interests; and
  • causes a detriment to the customer (financial or otherwise) if you enforce it.

If a court rules that your contract is unfair, you cannot enforce that term against any customers. You maIf you do so, you can be fined.

Key Takeaways

Your business’ terms and conditions are generally enforceable as long as it is clear that the other party to the contract has accepted them. You can ensure this by making sure that they have: 

  • the opportunity to read your terms and conditions; and
  • actively agreed to them. 

If you would like more information or help with the enforceability of your terms and conditions, contact LegalVision’s New Zealand ecommerce and online business lawyers on 0800 005 570 or fill out the form on this page.

FAQs

What are terms and conditions?

Your terms and conditions are a business document you write up and display on your website. It sets out the legal relationship between you and your customers, as well as how you are to conduct sales.

Are my terms and conditions a contract?

Your terms and conditions are a standard form contract. This means that the customer cannot negotiate the terms but they still need to accept the contract (or have the ability to accept the contract) in some way.

Can I enforce my terms and conditions?

You can enforce your terms and conditions if you can confirm or readily infer that customers have seen your terms and conditions and accepted them. This can be done by forcing them to scroll through your terms and conditions and making them click an “I agree” checkbox at the end.

What’s the difference between “browse-wrap” and “click-wrap”?

These refer to the types of terms and conditions that customers can potentially agree to. Browse-wrap terms and conditions mean that customers have to browse your website to find your terms and conditions, which you can hyperlink on your homepage. Click-wrap terms and conditions refer to the fact that users have to click “I agree” to confirm that they have seen and accepted your terms and conditions.

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