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Thursday, October 14, 2010

Featured Guest Blogger Sarah Hinchliff Pearson


Without realizing it, we have all entered into hundreds of legal contracts online. Nearly every website contains “terms of service” or “terms of use,” which dictate the rules under which you are allowed to access that site. Some websites require you to click to agree to the terms (so-called “clickwrap agreements”), while others simply state that by using the site, you agree to all of the terms listed (“browsewrap agreements”). In nearly all cases, the terms are dense, filled with legalese, and universally unread. But, despite being largely ignored by the public, these online contracts can have serious implications.

Take, for example, the case of Lori Drew. Drew created a MySpace account using a false identity – a direct violation of the MySpace terms of service. Then she used the account, which she had registered under a boy’s name, to harass one of her daughter’s classmates, first flirting with her and then dismissing her by saying that the world would be a better place without her. When the young girl then hanged herself, the government prosecuted Drew under the Computer Fraud and Abuse Act. Drew was ultimately acquitted because the judge held her conviction had essentially criminalized a breach of contract. This is the first and only time the government has attempted to prosecute someone for a federal crime based on a violation of terms of service, so Drew’s case is a rare and extreme example. Nonetheless, it is a reminder there can be consequences to glazing over the terms of service as we navigate the web.

One major consequence is we have no idea what it is we are agreeing to under these online contracts. It is very common for website terms of service to contain terms restricting user rights significantly. For example, the terms of service for the New York Times Online edition dictate no New York Times content may be stored or copied for anything other than personal use without prior consent. Taken at face value, this means it is arguably a violation of the policy to quote from and comment upon a New York Times article in a blog post. Of course, this practice is extremely pervasive online, and it is the bread and butter of the fair use doctrine under copyright law, which is strongly rooted in the First Amendment right to free speech. But according to the terms of service, if you access, you agree to all of their terms and conditions.

This is just one example of thousands of websites containing terms purporting to waive or limit users’ constitutional rights like the right to a jury trial or the right to engage in protected First Amendment speech. The important question of whether website users are bound by these terms has an unsatisfying answer – it depends.

As a general matter, people can waive their constitutional rights via contract. The question is whether terms of service create a contract at all. Contracts require a meeting of the minds. There must be an offer by one party and acceptance by the other. Acceptance can be express (“Yes, I accept”) or implied (taking action that signals acceptance). In the online context, courts have generally held clickwrap agreements to be enforceable contracts because website users are notified of the terms and expressly agree to them by clicking “accept.” Browsewrap agreements are more problematic because website users are said to “accept” the contract by simply visiting and using the site. Typically, the terms of these agreements are set forth via a hyperlink somewhere on the website, and users are not required to read them or even notified of their existence as they navigate the site.

Even under these circumstances, some courts will enforce browsewrap agreements against website users if the user was aware of the terms and continued to use the site. The Second Circuit Court of Appeals analogized the scenario to a hypothetical apple stand. A customer visits the stand and takes an apple thinking it is free. On her way back to the car, she sees a sign saying apples are 50 cents each. If she revisits the apple stand, she cannot take another apple claiming she thinks it is free. She is bound by the price listed on the sign because she knew the price and went back for another. Similarly, the court held, a website user who has actual knowledge of the terms under which use of a site is conditioned cannot avoid being subject to those terms.

Some courts will enforce browsewrap agreements even where there is no evidence the website user was actually aware of the terms or the existence of the contract. Recently, a Missouri state court held such an agreement enforceable against a user who had never read or otherwise learned of the terms of service. The website, called ServiceMagic, matches users with prescreened construction contractors. When users sign up a referral, the window contains a hyperlink to a screen listing the terms of use and the text next to the click button says, “By submitting you agree to the terms of use.” The court said this notice was so conspicuous that a reasonably prudent website user would have noticed it and learned of the terms of the agreement. Therefore, the defendant in the case was bound by all of the terms of use.

Other courts have refused to bind users to these agreements because notice of the terms is not sufficiently prominent. In one case involving Netscape, the court said a reasonable user would not have known they were consenting to a contract because the terms were listed so far down the page that a user would have to scroll down to see them. The terms of service in that case were thus not enforceable against the user.

Many of the most interesting cases have yet to be tested in the courts. For now, we are wise to read the fine print.

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