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Agreeing to Terms of Use

Is it legally binding?

2:17 am on Oct 17, 2002 (gmt 0)

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We currently require companies to remit (via snail mail) a signed advertising contract in order for us to implement their services. The problem is that its a slow process and some companies forget about sending in their payment along with the signed agreement. I know we have lost sales because of this.

The Situation:
We are redesigning our site, and instead of requiring companies to remit a signed agreement, we are thinking about allowing people to use a secure online form in which the vendor would have to click a checkbox indicating that they agree to our Terms of Service (TOS). The TOS would basically be our advertising contract.

From a legal standpoint, would clicking the checkbox constitute agreement with our terms of use and services? Perhaps I might be answering my own question, because if I go to Yahoo's email sign up page, they have a statement saying "By submitting your registration information, you indicate that you agree to the Terms of Service and have read and understand the Yahoo! Privacy Policy." (http://edit.yahoo.com/config/eval_register)

I just want to make sure this "click the checkbox to agree to our TOS" is legally binding. Any thoughts? Would it be best to get a handwritten signature on our advertising contracts, or would the online registration with the TOS checkbox suffice?

3:31 am on Oct 17, 2002 (gmt 0)

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Would it be best to get a handwritten signature

Yes. If you want a judge to take you seriously.

If all you want to do is cancel service for clients who abuse the TOS, then the e-form might be enough. But if there is a chance they might sue you for canceling their service, then you need an authorized signature.

There has been some work in the area of "digital signatures" recently, but I'd guess that most of your clients can't give you one yet. If you need to enforce the TOS, get a real pen-and-ink signature for now. (You might consider separating the TOS agreement and the first payment so they don't get confused.)


4:01 pm on Oct 17, 2002 (gmt 0)

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If I were going to accept digital signatures at all, I'd (a) provide for a method of accepting 'regular' sigs as well and (b) be prepared to spend money not just on a lawyer but also on an expert witness if you get sued and (c) require out-of-band authentication of the key.

If I recall correctly, in the U.S. an act of congress made digital signatures legally binding a while ago. There was a bit of doubt at the time as to whether or not that was a good thing, since congress seemed to think that 'non-repudiability' was a stronger concept than it is. (I can make a key with your name on it, and if I sign something with that key it is absolutely provable that it was signed with that key. Congress didn't seem to get the whole idea that I could put a name other than my own on it.)

IANAL. I read the coverage a while ago. I never read the proposed act. I'm only about 90% confident that it had actually passed.

4:09 pm on Oct 17, 2002 (gmt 0)

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WebmasterWorld Senior Member jeremy_goodrich is a WebmasterWorld Top Contributor of All Time 10+ Year Member

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Former President Clinton signed in an act making digital signatures here legally binding a few years ago..perhaps 98 or 97...not sure which exactly.

However, the act did leave it up to interpretation what would be accepted (as far as I recall) so if you are in the US, yours could end up a reference if it ever goes to trial :) Neat stuff, eh? (of course, there could always be a precendent out there already...I'm not a lawyer, and I'm not pretending to be up on that kind of stuff). :)

4:22 pm on Oct 17, 2002 (gmt 0)

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you haven't said what country you are in - different laws will apply in different countries. i'm no expert on the law, not even for my own country (the UK), but i'll try to give advice as best i can.

what yahoo and thousands of other websites throughout the world do ("I accept your Terms") is basically common practise. sometime's it's done by checkbox, sometimes by radio button, sometimes simply with text that reads "by proceeding, you are agreeing to our terms as shown <here>" etc. regardless of any legal obligation to make a customer aware of your terms, and regardless of any legal requirements for *how* to do this, and regardless of the legal validity of doing this, it's always a good idea. it looks more professional and can prevent the odd ordering problem - ie, ensures the customer is well aware of the services you do *and do not* provide.

countries within the EU should by now have updated their laws that state that contracts concluded over the internet (and by other distance selling means) to ensure they are legally binding or as legally binding as possible (read on).

as far as i know (and don't quote me on this), UK law allows any agreement, whether verbal or written, signed or not, to be legally binding. but in the event that there is a dispute that goes to court, if there is no proof that such a contract ever existed, the case could be dismissed. any case in court would depend on both parties agreeing that such an agreement ever existed, and any dispute would therefore be about the terms of the agreement. i believe that contract laws in most other countries are based on similar "burden of proof".

the UK has the Consumer Protection (Distance Selling) Regulations 2000 which set out legal requirements for information to be displayed on websites - ie, that terms must clearly be displayed prior to the customer placing an order from a website etc etc. this law sort of implies that any online ordering involves "a contract" - there is nothing that explicitly states that when an order is placed online, there is a legally binding contract (but read on).

the UK E-Commerce Regulations (from my brief reading so far) explicitly state that when orders are placed by distance means (ie, online ordering), there is a contract between the customer and the site owner (company / retailer / service provider or whatever) and just like any other contract, this contract *is* legally binding.

there is however, one slight problem - proof. there is nothing to stop me changing my terms once a purchase has been made, posting my new terms to my website, then telling the customer i don't provide the service he paid for. the UK government has sort of acknowledged this as a problem but has deliberately and quite openly avoided finding a solution - it looks like they prefer to let the courts set a precedent and amend the law later.

to explain this a bit more, the documents state that in certain cases, contracts should be provided by "durable medium" but they stop short of stating precisely what is and is not a durable medium. in general terms, we could expect a "durable medium" to mean something like "in a form that allows the customer to retain a permanent printed copy" of the terms in force at the time the transaction was made. the government suggest that fax or email could be "durable mediums", but they only *suggest* this and do not state that they *are* durable mediums. they do not suggest web pages could be a "durable medium" - there is no indication as to whether this is a deliberate or accidental omission. in contrast, the german government has stated that web pages are a durable medium but that emails are not.

at the end of the day, fax, web pages and emails can all be faked, and until such time as there is a simple means of proving the terms in force at the time these contracts were made, the law will remain vague.

my advice for a quick and cheap solution without needing to employ lawyers etc - look at several major companies in your country to see what they do and how they do it, and if you do something similar, you should be ok. they won't want the bad publicity associated with operating "in breach of" the law, so they'll generally keep on top of it and keep it legal. whether or not such contracts are legally binding will depend on the country / state you are in and the local laws there. if in doubt, consult a lawyer.

once you've set up your site with terms and online ordering etc, you still have the problem of enforcing contracts - if someone reneges on their contract to pay you for your services, you have to decide whether or not to try and enforce the contract and obtain payment. sometimes it just isn't worth the effort. i'll leave the final decision on that up to you!

12:56 pm on Oct 18, 2002 (gmt 0)

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If you are accepting credit cards, another issue comes up. What if the customer declines the charge? We have a radio button for our terms (which include a 25% restocking fee on returns), but when people dispute the charges we often lose.

We have even printed out our terms page along with the chaeckout page with the radio button on it and submitted them with our case to the credit card company, but often the credit card companies side with the cardholder no matter what.....

1:25 am on Oct 20, 2002 (gmt 0)

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>>If you are accepting credit cards, another issue comes
>>up. What if the customer declines the charge? We have a
>>radio button for our terms (which include a 25%
>>restocking fee on returns), but when people dispute the
>>charges we often lose.

first thing is, if a customer disagrees with your terms, you don't sell. simple as that.

second thing is, your terms have to be reasonable or the customer won't accept them, and nor will a card company.

in your case, i don't understand the need for a 25% restocking fee on returns. if the fee is noticed in the terms, that may well deter potential customers. i'm sure i've said this before in here, but how about bumping prices up slightly to spread the cost of returns across all sales? if the product costs $50, then the 25% cost of returns = $12.5. if one in ten gets returned, then $12.5 / 10 = $1.25. therefore, simply add $1.25 to the item cost and / or shipping costs and get rid of the restocking fees. any time you get a return, the restocking cost will have been paid for by the other sales.

the price increase may well be less than that depending on your returns level and the product cost. if your returns level is that high, you need to reduce it. you might need better descriptions of products etc so that people know *exactly* what they are buying and what to expect - if they can see it's not what they want before they buy, then they won't buy and won't have a need to return it.

and i just realised my maths up ^^^ there was a little bit wrong - i think it should be $12.5 / 9 but then i'm way too tired to think totally clearly :)

6:54 pm on Oct 24, 2002 (gmt 0)

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>Is it legally binding?

Do you think, this forum owner didn't had any online agreement?


P.S.. Thanks to rcjordan [ http://www.webmasterworld.com/forum9/3524.htm ]


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