Why website terms and conditions matter

Trevor (also known as “Twylite”) questioned the value of a website terms and conditions in his comment which he posted to my previous post titled “Take website terms and conditions seriously” (at the outset it is important to point out that this post doesn’t deal with every issue Trevor raised as my intention is to write about some of these topics in more detail in subsequent posts). It is an important question to ask for various reasons. One such reason is to dispel the notion that lawyers are really high priced snake oil salesmen/women selling a solution in the absence of a problem. Are website terms and conditions really just burdensome codifications of the common law, statute and legal precedent and ultimately a “bad thing for most bloggers” (to paraphrase Trevor)?

The short answer is “no”. A properly drafted website terms and conditions (this discussion applies to other legal notices like privacy policies and disclaimers) is tremendously valuable because it provides an effective shield protecting the website owner from a number of risks inherent in online publishing and services and because it helps the website owner better structure a relationship with visitors to the site.

This quick response is based on the assumption that website terms and conditions have any legal force and effect in our law. Trevor refers to American case law as authority for the proposition that website terms and conditions are only really “credible” where there is “conspicuous notice” of the terms and conditions coupled with an “unambiguous manifestation of assent” to those terms and conditions. It appears from Trevor’s review of this case authority that website terms and conditions really have little significance in the absence of these two elements. However, as is often the case when basing an opinion on foreign case law, a review of South African law paints a very different picture.

In South African law the Electronic Communications and Transactions Act (I’ll refer to this as the “ECT Act below”) answers deals with this question in two parts:

Legal recognition of data messages

11. (1) Information is not without legal force and effect merely on the grounds that it is wholly or partly in the form of a data message.

(2) Information is not without legal force and effect merely on the grounds that it is not contained in the data message purporting to give rise to such legal force and effect, but is merely referred to in such data message.

(3) Information incorporated into an agreement and that is not in the public domain is regarded as having been incorporated into a data message if such information is –

(a) referred to in a way in which a reasonable person would have noticed the reference thereto and incorporation thereof; and

(b) accessible in a form in which it may be read, stored and retrieved by the other party, whether electronically or as a computer printout as long as such information is reasonably capable of being reduced to electronic form by the party incorporating it.”

The ECT Act later provides as follows:

Formation and validity of agreements

22. (1) An agreement is not without legal force and effect merely because it was concluded partly or in whole by means of data messages.

(2) An agreement concluded between parties by means of data messages is concluded at the time when and place where the acceptance of the offer was received by the offeror.”

The effect of these provisions is to give legal effect to what the ECT Act refers to as a data message; specifically contemplates binding contracts concluded through data messages and allows for terms to be incorporated into an contract by reference. We also have a line of cases, commonly referred to as “ticket cases”, which support a similar argument. These ticket cases concern the terms and conditions you may find signposted as you enter a parkade, on the back of a hotel check-in card and at the bottom of an invoice referring to terms and conditions of sale located on the reverse. While Trevor is correct that an contract requires that the parties to the contract have what we refer to as a “meeting of the minds”, website terms and conditions can and do constitute valid contracts between the website owner and visitors to the website. There are certain conditions for this though, some of which are nicely set out in Acting Judge King’s judgment in the matter of Bok Clothing Manufacturers (Proprietary) Limited v Lady Land Limited:

“It is so, as I have said, that the nature of the document is relevant to the steps required of a party in order to bring the contractual provisions to the other party’s attention. The more contractually obscure or incidental the document, the less likely it is to expect it to contain contractual provisions and the more specific and positive must be the steps be which are taken to bring this to the attention of the other party. Per contra in the case of carriage tickets and bills of lading, where long established usage has created a situation where a contracting party, even an ordinary member of the public, will be taken to be aware of the existence of such provisions on the relevant document, or at least of a reference thereto, and to have knowledge thereof.”

It is likely that a court will view website terms and conditions in a similar light as a result of the provisions of the ECT Act and this line of ticket cases. Website terms and conditions are frequently drafted as contracts between the website owner and visitors to the website. This is why they often include a statement to the effect that if the visitor does not agree to the terms set out in the website terms and conditions, that visitor should not access the website further or that accessing and using the website constitutes agreement with the website terms and conditions (this is how the standard terms and conditions applicable to a parkade work: by taking a ticket and entering the premises your conduct is taken as agreement with the standard terms and conditions governing the use of that parkade). In other words, when you visit a website, your act of visiting the website culminated with the presumption that you are aware that there are website terms and conditions on the website (not necessarily awareness of the specific terms though) is taken as a form of assent to those website terms and conditions, almost as if you signed the website terms and conditions. In this way you have a presumptive meeting of the minds and a binding contract.

As an aside, Trevor referred to the Consumer Protection Bill and mentioned that the reference to “electronic transactions” suggests that the Consumer Protection Bill applies to website terms and conditions as falling under the rubric of an “electronic transaction” and introduces a series of requirements that he argues would mitigate against a 23 page legal document in favour of something much simpler. There are two difficulties with this approach. The first is that a cursory review of the Consumer Protection Bill suggests that it does not necessarily apply to website terms and conditions (I haven’t examined the Bill in detail but a reading of the key definition of a “transaction” indicates that an essential element of qualification as a transaction is some form of “consideration” (also defined and loosely meaning payment) in return for goods sold or services rendered, neither of which may apply to a website).

The second difficulty is that a longer document does not necessarily mean it is incomprehensible to non-lawyers. There is a trend to draft legal documents in plain language such that most literate people can read the documents and understand what they are saying. This is a welcome departure from the classic legal documents encrypted with 256 bit legalese. The reason why these documents are often so lengthy is that there are so many legal issues and risks to cater for that the stereotypical 1 page contract is simply not enough.

On the basis that a website terms and conditions constitutes a valid contract, the question then becomes what to put into the document. To answer this question you have to consider what the purpose of a website terms and conditions is. As I mentioned earlier, website terms and conditions help address known legal risks and help regulate relationships with visitors.

When it comes to legal risks, website terms and conditions frequently contain disclaimers of liability (where the website owner and the visitor agree that the owner is not liable for certain things); limitations of liability (where the owner is liable, its liability is limited in some way) and indemnities (where the visitor indemnifies the owner where the owner is held liable for something). Website terms and conditions also deal with content licensing issues (either to reiterate a legal position, for example ownership of copyright, or to vary this position with a content license like a Creative Commons license); which uses of the website are acceptable and authorised, to establish jurisdiction by consent, assert the governing legal system and so on.

Website terms and conditions should arguably aim to encapsulate the contractual relationship between the website owner and the visitor to the website. Therefore they should be as comprehensive as is possible in the circumstances and the end result is a legal framework for the use of and access to the website. The default position established by the common law and statute is frequently unsuitable given a website owner’s needs or leaves too much up in the air so website terms and conditions help bring more certainty or change the default position to suit the website owner, where possible. It is therefore critically important that website terms and conditions be carefully considered and well drafted.

When it comes to privacy and the collection of personal information, it is important to note that the privacy provisions in the ECT Act (in particular, Chapter 8) do not supersede the Promotion of Access to Information Act (also known as “PAIA” and one piece of legislation designed to give effect to the Right to Privacy in the Bill of Rights). PAIA deals largely with how people may access personal information held by public and private bodies. Chapter 8 of the ECT Act is a precursor to more comprehensive and dedicated legislation dealing with how personal information (defined in both the ECT Act and PAIA) may be collected and processed. Informed consent is an important consideration when it comes to collection and processing of personal information and privacy policies play an important role in facilitating this. The fact is operating a modern website means that personal information of some description is going to be collected and processed in some way, whether this be manually or automatically. This happens when a visitor to a blog comments and when analytics software collects information about visitors and analyses trends, for example. Website owners therefore need a privacy policy to let visitors know what information is being collected and what it is going to be used for as a precursor for obtaining their consent to this.

While I am on the topic of terms and conditions, it is worth repeating an offer I made to South African bloggers:

In order to assist bloggers we have prepared a generic set of terms of use (incorporating a privacy policy) which are available for free to bloggers. This document is licensed under a Creative Commons license so bloggers are free to share it and pass it around. The blog terms of use is a fairly simplified version of the commercial grade terms of use typically required by larger companies and is tailored for use on blogs. The zipfile includes an explanatory note with a little more information about the terms of use. It is important to note that the terms of use do not represent legal advice on any specific blog or set of circumstances and should not be regarded as such. Consult your lawyer if you require specific legal advice.

Update: The blogger terms of use are also available through Scribd although remember that you still need to add your details to the document before you can use it.

It is very helpful when people like Trevor take an active interest in their legal positions and take the time to comment on and respond to posts and articles on these topics. It is equally important to find out what the legal position is and how you can best protect yourself from the myriad risks people encounter on a daily basis, particularly online.

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