Website terms and conditions

By James Flowers

Web-based suppliers need to consider a range of factors to be sure that their website terms and conditions have the effect intended. By James Flowers.

A web-based supplier cannot operate its business efficiently (if at all) if it has to negotiate with each person who wishes to access its website and/or purchase products and services through it. The supplier needs to ensure that the terms and conditions it uses govern the contract of supply with its customers.

Web-based businesses devote considerable effort to preparing website terms and conditions but often do not focus on whether those terms and conditions will be legally enforceable. Unless care is taken, not only might the terms be unenforceable but the business may end up being bound by terms and conditions imposed externally - by statute or by customers.

'Clickwrap' agreements

The so-called 'clickwrap' agreement (named because it is formed when a customer clicks through using a mouse or an on-screen button or icon) is a common way of 'accepting' terms and conditions on-line.

Such agreements have been enforced in the United States. It is not clear whether they are enforceable in Australia. However, based on general principles, it would seem that, if properly implemented, click wrap agreements are enforceable in Australia.

What is clear is that such terms will not be enforceable if the customer is not given adequate notice of the terms and is not given the opportunity to reject them. Also, in order for the terms to apply to the contract of sale, there must be unambiguous acceptance of the terms by the customer before the transaction takes place.

As with other forms of a contract of supply, terms may be implied into the agreement by statute (for instance, Trade Practices Act and Sale of Goods Acts) or through conduct. The supplier will generally want to exclude or limit (to the extent permitted by law) those implied terms.

Other considerations

Other factors affecting the content and enforceability of website terms include:

1. The Electronic Transactions Acts which govern in some cases when acceptance is deemed to have taken place, the identity of the person who 'clicked' his/her acceptance and how customers can 'sign' documents electronically.

2. The legal capacity of the customer (for example, a contract with a minor will generally not be enforceable).

3. The overall design of the website and in particular the website's clarity and ease of use (customers may seek to avoid 'clickwrap' agreements on the grounds that they didn't understand what they were doing or mistakenly clicked the wrong icon).

4. The inability of the customer to bargain or negotiate or a finding that the terms were difficult to understand or read may be powerful reasons for a court to construe such terms narrowly or exclude them altogether.

In a nutshell, web-based suppliers need to consider a range of factors in order to ensure that their website terms are enforceable as intended. What is required is a holistic approach which considers the impact of the content, design and layout of the website taken together.

James Flowers is a lawyer at Minter Ellison. Contact: james.flowers@minterellison.com