Marketers who improperly use company names could face criminal and civil penalties

Anyone running a social media profile on a client’s behalf should be very careful when tweeting or posting on the client’s behalf. The consequences of careless references to or variations of a company’s name could be severe under certain understated provisions of the new Companies Act.

Apollo Director Phillips Monitors Apollo 11 Pre-Launch Activities

The Companies Act’s provisions

Section 32 of the Companies Act deals with “[u]se of company name and registration number” and subsections 3 and 5 are the clauses social media practitioners should be aware of:

(3) A person must not—

(a) use the name or registration number of a company in a manner likely to convey an impression that the person is acting or communicating on behalf of that company, unless the company has authorised that person to do so; or
(b) use a form of name for any purpose if, in the circumstances, the use of that form of name is likely to convey a false impression that the name is the name of a company.

(4) …
(5) Contravention of subsection (1), (2), (3) or (4) is an offence.

The term “person” in the Companies Act “includes a juristic person”. In our law there are two basic types of “persons”. We have natural persons which are human beings and juristic persons which are corporate entities like companies and close corporations.

What this means is that any person who uses a company’s name that suggests that the person is communicating on the company’s behalf and isn’t actually authorised to do that will be committing an offence under the Companies Act. That is fairly straightforward but subsection 3(b) is not nearly as clear although can be even more problematic for careless marketers. It uses the phrase “form of name” which is only used in this sub-section of the Act. The word “form” is defined fairly extensively in the Oxford Dictionary of English, and includes the following definitions:

  • the visible shape or configuration of something
  • a particular way in which a thing exists or appears
  • any of the ways in which a word may be spelled, pronounced, or inflected

It appears that “form of name” includes both variations of the company name (for example, “Pick ‘n Pay” as a commonly used variation of Pick n Pay Stores Limited or Pick n Pay Holdings Limited or “Woolies” as a common reference to Woolworths (Proprietary) Limited or Woolworths Holdings Limited – assuming you know which one you are referring to) and it may even include variations of the company’s trade marks, such as logos, and other representations of the company’s name. Assuming this is how the clause will be interpreted, subsection 3(b) criminalises a variation of a company’s name which conveys “a false impression” that the variation “is the name of a company”. The idea here may be to ensure that company’s names and branding is accurately and reliably conveyed to the public and the risk of confusion minimised.

Section 218 deals with “[c]ivil actions” (as opposed to the criminal offences that a violation of section 32 would constitute) and subsections 218(2) and (3) state the following:

(2) Any person who contravenes any provision of this Act is liable to any other person for any loss or damage suffered by that person as a result of that contravention.
(3) The provisions of this section do not affect the right to any remedy that a person may otherwise have.

These two subsections in section 218 introduce specific liability for any “loss or damage” caused by “[a]ny person” and suffered by “any other person” and doesn’t exclude whatever other remedies “a person” may have in law. This clause’s scope is pretty broad, may be open to constitutional scrutiny, and opens the door to civil liability in the form of a financial sanction flowing from the contravention of the Companies Act in addition to whatever other remedies may be available.

What does this mean for marketers?

Drawing all of this together, a marketer or other social media practitioner could find him or herself being charged with a criminal offence and sued for monetary damages for either using a company’s name in such a way as to falsely suggest the marketer or practitioner is authorised to represent the company concerned or where the marketer or practitioner uses a “form” of a company’s name that is not the company’s actual name and, instead, falsely creates the impression that it is. This sort of issue could easily arise in the manner in which a brand’s Twitter or Facebook pages are operated (both how they are set up and presented to the public, fans and followers as well as what is published in those streams) as well as out of a marketer’s or practitioner’s efforts to promote the brand.

One specific challenge tweeting under a brand’s name without drawing a distinction between the person doing the tweeting and the brand’s official communications where the tweeter posts updates that don’t fall within the tweeter’s mandate (for example, a personal comment that isn’t sanctioned by the company). Another is using an unauthorised “form” of a company’s name in a Facebook Page update or blog post, for example. These sorts of mistakes can be made but they potentially carry severe consequences (an offence could mean a fine or imprisonment not exceeding 12 months, or both). Given the definition of “person”, agencies that operate social media profiles can also find themselves in trouble.

Managing these risks

Managing these risks and still diligently promoting a brand can be accomplished. Agencies must have clearly defined roles and parameters and these must be effectively communicated to their staff and compliance with these restraints must monitored. This means being specific with clients in agreements and communications regarding the agency’s use of a client’s brand and the manner in which the agency’s staff will communicate with fans and followers on the client’s behalf. Agency staff should also draw clear distinctions between posts intended to be associated with the client and its brand, on the one hand, and posts which are not. There should be no confusion between a company or its brand, on one hand, and the people promoting it behind the scenes.

Appropriate risk management steps should be taken from the start and maintained on an ongoing basis, taking into account changing circumstances, instructions and feedback received from the public, the client and other relevant stakeholders. Not making the effort to better manage these risks could result in more serious consequences down the line than the upfront cost of developing and implementing the appropriate framework.

Open sourcing legal documents

I thought I was being relatively radical and progressive when I wrote about how the approaching legal documents business singularity but it seems I was just joining a crowd of progressives. Two recent posts caught my attention recently which illustrate this growing trend.

In the first post, titled “Standardizing (vs. Reforming) Contract Drafting“, William Carlton talks about open sourcing legal documents by opening up law firm precedent banks to the general public. In his response to a post on Koncision blog arguing that legal documents open sourcing just isn’t happening in a meaningful way, Carlton said the following:

Ken, I really mean open sourcing, not crowd sourcing. The place to start (I think) is to simply “out” the template banks that every law firm keeps. 2007 was the dark ages, in web terms; it will not be possible to keep templates off the web much longer. And business lawyers shouldn’t try. (Prediction: the most successful won’t.) The profession should embrace transparency and move on to charging clients for counseling, negotiating, customizing. Not for unveiling the boilerplate.

Carlton points to news that international legal group, DLA Piper, reportedly intends dropping the walled garden around its precedents which it restricted to its clients (a major legal group already sharing its precedents with its clients). The Koncision post was partly in response to an earlier post by Carlton titled “Open Sourcing Legal Docs” which explores the idea of making legal precedents publicly available as part of a broader process of identifying best practices and almost standardizing sets of documents based on those best practices. Carlton concludes that post with the following observation:

And the legal profession will do just fine. Right now the industry is still behaving as though there is proprietary value in standard boilerplate documents, and the opposite is true: there is tremendous public value in the documents, and unleashing that value helps clients and lawyers alike. The sustainable proprietary value is in counseling what, when, how, and why not or why something else instead.

The other post which inspired this post is the second part of a series of posts titled “Developing CAD for Law” on the Contract Analysis and Standards blog. This second post talks about how legal documents have an almost modular construction and the goal of a contract development platform would be to take blocks of text or clauses that can be combined, forming coherent legal documents appropriate for specific circumstances. I pointed out a service which does something similar in my previous post. Another interesting approach is a comparative approach to certain types of documents aimed at distilling the best clauses to be incorporated into the intended document. The example I came across is a template for an End User License Agreement on the kiiac site.

This all points to an increasing shift away from document-based legal services to what the legal services business should be: applying legal knowledge to specific situations and formulating effective legal frameworks to meet clients’ needs. Legal documents become analogous to software applications with variable functionality. The real value is in the knowledge and skill that produces not only those applications but also develops the appropriate and broader framework.

I mentioned in my previous post that I will be releasing my documents under a Creative Commons license. I have selected the Creative Commons Attribution-ShareAlike 2.5 South Africa License for my documents and my first release under the “web.tech.law legal docs” brand is an agreement for photographers which I published to the web.tech.law Facebook page yesterday evening. This first document is available for free although future documents be paid “apps”. I will expand this offering in due course to include a support model for these documents. The document is available for download and comes with an explanatory note:

Explanatory Note – Photographer Terms and Conditions

Photographer Terms and Conditions

Are email disclaimers enforceable?

Email with Mark Zuckerberg, CEO of Facebook

The Economist has a thought provoking article titled “Spare us the email yada-yada” with the subtitle “Automatic e-mail footers are not just annoying. They are legally useless”. The article highlights some of the challenges facing email disclaimers and there are just no clear answers that I have come across. The central challenge is the following:

Many disclaimers are, in effect, seeking to impose a contractual obligation unilaterally, and thus are probably unenforceable.

When you send an email to someone and you have a disclaimer or link to terms and conditions, the recipient of the email may not be expecting your email or be familiar with your terms. That person may not be inclined to agree to your terms and conditions which you are effectively seeking to impose unilaterally. An email disclaimer is a form of contract with email recipients and contract law usually hinges on a “meeting of the minds” between the contracting parties. Unilaterally imposing terms and conditions is not a meeting of the minds and it is certainly not the result of some sort of negotiation.

A local blogger recently had a bad experience with a global fast food chain and tweeted his experience. The chain got in touch with him about the experience and unilaterally sought to prevent him from mentioning anything about his communications with the chain through, as I understand it, an email disclaimer. Why should the blogger be restrained from exercising his right to freedom of expression simply because the chain has a confidentiality requirement in its email disclaimer. This doesn’t seem to be in line with the contractual principles which underpin these terms and conditions.

A counterargument which I have been thinking about is that the recipient is presented with a set of terms and conditions on the basis that her consumption of that email is subject to those terms and conditions. By reading the email and acting on it, the recipient is signifying, by her conduct, that she has read, understands and agrees to those terms and conditions. This is a similar principle that applies to website terms and conditions, parking terms and conditions and hotel checkins, to name a few parallel examples. The problem with this approach is that the recipient generally only becomes aware of these terms and conditions after having opened and read the email. References to email disclaimers are typically at the bottom of an email and where there are restrictions on confidential information disclosure, for example, the damage is probably already done by the time the recipient gets to the terms reference.

Another problem with email and a characteristic which distinguishes it from the examples I mentioned above is that emails are data messages sent from the originator to the recipient, often passing outside the originator’s messaging system in the process. Unlike website terms and conditions and similar terms, originators can easily lose control of the disclaimer notice and are not guaranteed that it will be displayed prominently each time the message is displayed, or at all. While a website user can be bound by website terms and conditions just by visiting the website, the legal principle behind this starts to break down a little when it comes to email terms and conditions, at least the principle’s application.

Absent clear authority on this (and I could have missed something), making use of email terms and conditions is a risk management exercise. If these terms and conditions are legally binding, despite their challenges, then companies would be irresponsible not to make sure that they not only make use of these terms and conditions but that these terms and conditions are complete and comprehensive. Can you afford to take the risk?


Image credit: Email with Mark Zuckerberg, CEO of Facebook by Robert Scoble, licensed CC BY 2.0

Managing your contracts more effectively

Having your contracts prepared and signed is only part of your contract management process. It is usually also only the beginning of what could be a long relationship with your contracting party. It makes sense to give some serious thought to an ongoing contract management process for you business. Reasons for this include –

  • Legislative requirements (Companies Act, Consumer Protection Act, Electronic Communications and Transactions Act and many other Acts and Regulations have document retention requirements or deal with document retention processes);
  • Maintaining accurate records to inform ongoing contractual relationships;
  • Being able to deal with disputes or queries regarding parties’ obligations and rights, and so on.

If you haven’t taken stock of your contracts with other parties, a good starting point is to conduct a form of due diligence through which you collate all documents with contractual significance (these includes both contracts themselves as well as any other documents which could have a bearing on contract terms such as emails, appendices, memoranda of understanding, letters and other documents. Many people forget that a binding contract need not be a formal document setting out the contractual framework and signed by both parties. Documents with contractual significance (and which could form part of an overall contractual framework) could include letters, notes, faxes, emails, instant messages and even sms’s. All of these documents and data should be collated and analysed to determine their significance and impact.

Master's Oath from the Barque Azor, 04/20/1878

Having conducted a review of your company’s contractual frameworks, it is a good idea to develop and implement an effective contract management processes which may include –

  • review how contracts being managed (stored, filed, compliance monitored, diarised etc);
  • identify who is responsible for managing contracts;
  • Determine milestones like renewal dates, delivery dates, termination dates, when renewal notices are due; and
  • Create repository of paper and digital contracts and related documentation, shared with key contract administrators.

Aside from managing the documentation informing your contractual frameworks, it is also advisable to implement appropriate policies within your organisation to guide how contracts are entered into and who may do so on your company’s behalf. In an environment where emails, instant messages and tweets can give rise to binding contracts, companies must clarify who has contractual authority within their organisations and with their contracting parties. Those people with authority to bind the company should be subject to a review process to ensure they are complying with the company’s guidelines.

It is also becoming a necessity that companies not only make sure they have adequate email disclaimers but also appropriate terms and conditions to govern communications on social media platforms.

Contract management processes take a fair amount of planning and work to implement but they will be more than worth the effort. There are a number of useful contract management resources online which you may find useful including the UK National Audit Office’s “Good practice contract management framework”.

Plain language complexities in contracts

As you probably know by now, the Consumer Protection Act mandates contracts written in plain language. That means al that legal jargon few people understand should be removed and replaced with more straightforward language that the average person can understand, not just multi-lingual lawyers with a strong grasp of conversational Latin, Old English and Dutch. While we can all appreciate the value of plan language in a document as complex as a contract, actually writing a contract in plain language and still dealing with all the issues you need to deal with in a contract isn’t always that easy.

Contract

One of my clients asked me to take a look at a set of clauses in an agreement I prepared for the client a little while ago. The clauses are designed to limit my client’s liability and were the latest iteration of the liability limitation clauses I used in my contracts (lawyers frequently have precedent banks where they store old precedents and examples of contracts and documents – more often than not any documents your lawyer prepares for you is based on precedents in your lawyer’s precedent bank). Like many lawyers, I improve clauses I use in contracts almost on an ongoing basis. Each agreement I prepare for a client typically represents the latest wording and structure that I am using. The clause in question looked a little like this:

  1. LIABILITY
    1. Disclaimers and limitation of liability
      1. The Customer agrees that Acme is unable to, and is not required to, guarantee a particular result or set of results.
      2. The Customer agrees that Acme shall not be liable in respect of any loss or damage caused by or arising from the unavailability of, any interruption to the Services.
      3. The Customer further agrees that –
        1. under no circumstances whatsoever, including as a result of Acme’s negligent acts or omissions or those of its servants, agents or contractors or other persons for whom in law Acme may be liable, shall Acme or its servants, agents or contractors or other persons for whom in law Acme may be liable (in whose favour this constitutes a stipulatio alteri or stipulation for another), be liable for any direct, indirect, extrinsic, special, penal, punitive, exemplary or consequential loss, damage or damages of any kind whatsoever or howsoever caused (whether arising under contract, delict or otherwise or as a violation of any Party’s intellectual property rights and whether the loss was actually foreseen or reasonably foreseeable), including but not limited to any loss of profits, loss of revenue, loss of operation time, corruption or loss of information or data and/or loss of contracts sustained by the Customer, the Customer’s directors, servants, dealers or Customers, resulting from the performance or availability of the Services.
        2. no claims or legal action arising out of, or related to, the Services or this Agreement may be brought by the Customer more than 1 year after the cause of action relating to such claim or legal action arose.
    2. Indemnity
      1. The Customer hereby indemnifies Acme and its officers, directors, employees, servants, agents or contractors or other persons for whom in law Acme may be liable (in whose favour this constitutes a stipulatio alteri or stipulation for another) from any loss, damage, damages, liability, claim, expenses, costs orders or demand due to or arising out of or for:
        1. any violation of any Party’s intellectual property rights including, but not limited to, copyright, trade mark and/or patents; and/or
        2. breach of privacy as a result of the collection and/or processing of personal information (as defined in the Promotion of Access to Information Act, No. 2 of 2000) by the Customer, its directors, employees, agents, suppliers, contractors or service providers; and/or
        3. defamation or slander; and/or
        4. any loss or damage arising out of or in connection with an act or omission of the Customer in connection with the Services or facilities provided by Acme to the Customer.

    These clauses cover quite a bit of ground and are intended to curtail Acme’s liability to the point where any potential liability for harm suffered by something other than gross negligence (you can’t contract your way out of liability for gross negligence) or wilful misconduct should be pretty limited. The immediate problem with the clause is that it really isn’t very easy for the average person to understand on a first or second reading and that prejudices usability quite a bit. Adding to this, the Consumer Protection Act requires companies dealing with consumers to highlight these sorts of clauses and when you factor in the plain language requirements, these clauses need to be intelligible to the average person. Unfortunately it isn’t, despite it being a fairly good attempt at achieving their objective.

    I took a look at this clause yesterday afternoon and thought there had to be a better way to achieve the clauses’ objective of limiting my client’s liability while keeping the clauses written in as plain language as is possible. When it comes to plain language, there is always going to be a tension between using efficient and effective language and writing the clauses as simply as is possible to make the clauses intelligible to the average person. That is not easy at all. One reason is that many of the terms lawyers use are almost shorthand for fairly complex concepts with a lot of legal development behind them. Ditching the terminology would require us to explain the concepts in sufficient detail to retain the effect of the clause and not detract from that effect by diluting the language with terminology that is too simplistic. I suppose its analogous to watering down the jet fuel to a point where people can handle it safely but at the risk of negating its value as propellant in the jet.

    So I sat down with this complicated set of clauses and reworked them over the course of a couple hours. The process involved looking closely at what each element of the clauses was intended to achieve, the legal implications of those clauses and considering whether there was a way to achieve the same effect without blurred vision and headaches. This is one of the versions we (I collaborated with one of my colleagues) came up with:

    1. LIABILITY
      1. Disclaimers and limitation of liability
        1. The Customer agrees that Acme is unable to, and is not required to, guarantee a particular result or set of results pursuant to the provisions of this Agreement.
        2. The Customer agrees that neither Acme or Acme’s Associates shall be liable to the Customer in respect of any loss, damage or damages, howsoever caused and howsoever arising, as a result of anything done by Acme pursuant to the provisions of, or in furtherance of this Agreement.
        3. In addition to Clause 1.1.2, no action or proceedings arising out of, or related to, the Services and/or this Agreement may be instituted against Acme by the Customer more than 1 year after the cause of action relating to such claim or legal action arose.
      2. Indemnity
        1. The Customer hereby indemnifies Acme and Acme’s Associates from and against any loss, damage, liability, claim, expense, costs orders or demands which may be suffered by or may arise as a result of anything done by the Customer, save as a result of Acme’s unlawful conduct, wilful misconduct and/or gross negligence.

    The difference is pretty stark although the question now becomes whether this revision has the desired effect: protecting my client and limiting its potential liability as much as the original clause while improving the clause’s legibility and intelligibility.

    I think the revision does achieve what I set out to achieve but we lawyers can’t afford to rest on our upholstery. The law changes pretty quickly and so do drafting conventions. We have to keep iterating with our contract language or we risk falling foul of legal requirements like plain language requirements or opening holes in our clauses’ contractual protections. This sort of work is ongoing and I think it also reveals how seemingly plain language requirements are not always easily met.


    Photo credit: Contract by nyello8, licensed CC BY 2.0

How tweeting can get you fired

Mail & Guardian had a story a week or so ago about rugby commentator Andrew Lanning’s dismissal by SuperSport after he tweeted information about SuperSport and its parent company, Multichoice. The article’s title, “Fired for tweeting“, was a little misleading (the article clarified the issue, though) and that idea of being fired for using Twitter no doubt caught readers’ attention. The real reason for his dismissal isn’t nearly as sensational and happens far more often than you may think.

TankLanning tweet

Candice Jones, the article’s author (and TechCentral’s deputy editor), captured the real issue at the beginning of the article:

The broadcaster’s communications manager, Clinton van der Berg, says it “regrets that Lanning, while attending a commentary workshop at SuperSport on Wednesday, chose to tweet various confidential matters pertaining to both SuperSport and SA Rugby”.

Van der Berg says Lanning’s actions were contrary to company policy. Although the company has a social media policy in place, it says this wasn’t necessarily breached. However, Lanning’s posts breached confidentiality and would have been actionable no matter the medium used.

Lanning did what innumerable employees have done before him. He divulged confidential information he appears to have been contractually prohibited from disclosing. What is novel about his disclosure is the medium he used, Twitter, and its immediacy. What I find curious about the article is that SuperSport’s representative commented that while “the company has a social media policy in place, it says this wasn’t necessarily breached”. If Lanning did divulge confidential information and this wasn’t a breach of SuperSport’s social media policy then this discrepancy suggests that the SuperSport social media policy hasn’t been adequately drafted. While social media policies should not be drafted as punitive frameworks, they should tie social media use into a company’s broader policy framework and this should include how confidential information is protected.

This story touches on a number of conflicting considerations. For starters, a confidentiality breach is still a breach if it occurs on Twitter, a blog post or in a phone conversation. To a large extent, the medium is irrelevant. On the other hand, if the information was not confidential then was Lanning’s right to freedom of expression violated? A number of organisations are unsure about what social services like Twitter and Facebook and their implications and tend to react out of fear than a meaningful understanding of what these services are and their associated risks. The memeburn post about Lanning’s dismissal lists a couple other instances where tweeting has been banned and I find myself wondering how often these sorts of bans are motivated by panic, as opposed to a need to protect a legitimate interest.

Certainly, there are many instances where Twitter use can cause real harm. A bank employee tweeting sensitive information right before a bank announces its results could have real economic implications for the bank, for example. There are a number of similar examples of where people should not be permitted to tweet about sensitive information because doing so could cause some form of harm. The same principle applies to other forms of publishing like blogs, Facebook posts and so on. Virtually real-time publishing tools like Twitter introduce an immediacy and scale that wasn’t present at all or to such an extent previously and that means that companies must approach social media use on a well-informed and holistic basis.

Companies should ensure that their employees are adequately informed about the company’s interest in protecting its confidential information and how they can help achieve this. They should be educated about the risks of using social media to publish potentially sensitive information. That education frequently includes an adequately drafted social media policy which dovetails with the company’s existing policy and contractual framework. Ultimately if an employee divulges confidential information, whether it be on Twitter or otherwise, it is likely actionable and could well lead to the employee’s dismissal.

Your website terms and conditions may contain prohibited terms

I’m working on a particularly interesting challenge at the moment which was introduced by proposed regulations to the Consumer Protection Act which goes fully into force in a couple months. First a little background. The Consumer Protection Act will have a fairly radical impact on consumer rights in South Africa. One of the better publicized influences (and probably one of the more understated and yet more important ones) is the requirement that contracts be written in plain language. This requirement, alone, should have a dramatic benefit for consumers who have been confused by legal jargon for far too long. This is particularly important as contracts become increasingly complex to accommodate new legislation like the Consumer Protection Act, ironically.

The Consumer Protection Act prohibits a number of practices and this includes certain types of contractual terms. Section 48 of the Act deals with “Unfair, unreasonable or unjust contract terms” and section 48(1)(a) has the following to say:

48. (1) A supplier must not—

(a) offer to supply, supply, or enter into an agreement to supply, any goods or services—

(i) at a price that is unfair, unreasonable or unjust; or
(ii) on terms that are unfair, unreasonable or unjust;

The Act, itself, doesn’t give too many specific examples of which terms would be considered “unfair, unreasonable or unjust” although it does mention that terms which are “excessively one-sided in favour of any person other than the consumer or other person to whom goods or services are to be supplied” would be considered problematic.

The Trade and Industry Minister published draft regulations to the Consumer Protection Act for comment in November and one of the provisions in these draft regulations caught my eye. The draft regulations deal with a number of issues (the draft regulations run to about 96 pages) and right at the very end is section 56 which gives some substance to the Consumer Protection Act’s prohibition on contractual terms which are considered to be unfair and unreasonable. Section 56(o), in particular, proposes deeming the following types of clauses to be unfair:

enabling the supplier to unilaterally alter the terms of the agreement including
the characteristics of the product or service

This seems fair, suppliers should be able to change contract terms and conditions that consumers have reviewed and agree to. Well, they seem fair until you consider that website terms and conditions are contracts with the website’s users and visitors and they generally contain a clause which allows the website owner to change the terms and conditions unilaterally. This common clause in website terms and conditions has an important, practical function. It allows the website owner to make what may be important changes to its contract with its users which may be necessary for the website’s proper functioning and operation without the need to negotiate the changes with each and every user and visitor individually. Ordinarily, parties would be required to negotiate amendments to their contracts and agree on them for them to be of any force and effect. In the context of a contract between a consumer and a supplier in the ordinary course, requiring that the parties negotiate and agree on changes to their agreement is beneficial to the consumer because it means the consumer won’t find herself subject to terms she didn’t agree to when buying the product or requesting the service.

Certificate of the Slaves on the Syrena, 05/12/1820 (page 1 of 2)

The problem is that this requirement doesn’t scale very well, certainly not with the sorts of numbers of consumers (aka, users and visitors) who frequent popular websites. In fact, requiring website owners to negotiate changes with users and visitors (casual visitors can probably be handled a little differently to ongoing users, I think) would likely result in multiple versions of the terms and conditions, each containing variations particular to each consumer’s negotiations with the website owner. The complexity and variation of the terms and conditions would only increase in time and managing these contracts would become practically impossible. The only way to circumvent this is a clause in the contract (aka, the website terms and conditions) which enables the website owner to change terms and conditions unilaterally. Unfortunately, this could become a prohibited practice if this line item remains in the published regulations.

This presents a challenge to website owners who may soon find that this often understated clause could well become an unfair or unreasonable term and, effectively, prohibited. I have a couple ideas how to deal with this but the one risk is not implementing a solution which doesn’t amount to another prohibited practice under the Act, for example a term which has as its general purpose or effect defeating the purposes or policy of the Consumer Protection Act (section 51(1)(a)(i)). It is an interesting challenge and short of a workable contractual mechanism or legislation relief, this may be something for a court to address in years to come.

On a related note, it is also worth bearing in mind that this is not the only respect in which the Consumer Protection Act impacts on website terms and conditions. The Consumer Protection Act includes a host of requirements which necessitate a number of changes to website terms and conditions, particularly those dealing with liability limitation mechanisms, so be sure to have your website terms and conditions reviewed and amended.