Internet contracts (ex: TOS) are active only short-term?

[Artashes]

Bad news for electronic sellers of products and services. As I found out, the Terms of Service agreements or Acceptable Usage Policies (and other contracts) are legally enforced between you and your customer only for a certain period of time.

Avoid legal troubles and complications by using the most effective method that I describe below.

I'm not a lawyer, but I did study the Internet Law and Jurisdiction for a period of time because it is one of my interests. And if you sell products or services via the Internet, I have bad news - you might be in legal trouble as of right now. Here is why.

In easy terms, e-contracts, like traditional contracts, are usually used to resolve disputes and so should be written with that objective in mind. Enforceability depends on having a signed writing that includes the terms to be enforced.

That is why you and all other sellers have "Agree" and "Do Not Agree" to terms buttons before the order can be completed on their web sites. If your customer have chosen to agree to your terms - you signed a contract with him.

Here comes the bad news: as the key of such a contract is that it is just like a traditional offline contract - legally speaking - it gets automatically terminated when you make a change to its content. Having a clause that states that certain Terms of Serivce or parts of it are subject to change without prior notice does not have any legal power and will not help during the dispute.


How to avoid this problem?

In order to make the contract between parties (you and your client) active at all times, you BETTER (1) inform them of changes every time a change has been made and (2) make him sign in ("Agree" to it) again.

How? Easy. Whenever you make a change to terms, e-mail all your customers and make them look through the terms and click Agree button again.

There are certain outcomes:

- they can either Agree - then everything's fine.
- they can disagree, which will require you to discontinue service to them.

So, as you might guess, it might be costly, but it will be worth it if there is a dispute: legal fees, lawyer fees, etc. will all exceed the cost of service if you terminate the service later based on new clauses in your updated terms. Assuming, of course, that your customer printed out the terms of service the day he signed the contract so he has documented proof of the changes you've made later on after you both signed it.

This practice, however, will keep you safe at all times. That is why PayPal (one of not so many ventures) is doing it every time they update their terms.


I though this might be helpful to some online businesses to realize the potential legal dangers in regard of your agreement practices.

If you have additional information about this, I think it is important that you add it to this thread.

[SIZE=1]PS: This is not a legal advice. Aforementioned statements have no legal power whatsoever.[/SIZE]

[kunta]

Hm.. that helps a lot.. Only thing is my policy hasn't changed yet. So no worries for me :).

That could be a good thing for customers though. If they are dissatisfied with their service and there was a new policy they don't have to abide by it.

Companies beware :-P

[JTCentury.com]

Nice post. Now let's say a company ABC sells tshirts and their contract remains same. A few weeks later a customer does a chargeback. How can one convince their chargeback department that the customer virtually agreed to the the contract and the chargeback does not fall under any conditions of a refund mentioned in the contract?

Thanks

[Artashes]

JTCentury,

According to e-commerce law, every time a seller buys a t-shirt (or a book - whatever it is) on a web site, he/she automatically signs a virtual contract with that seller. For that reason it was his responsibility to read the Terms of Service and learn what are the "rules of engagement" (guarantees, costs, refund policies, security) prior to make that buy.

That is why not to create a mess on the internet (so that every online customer can avoid clicking "I Agree" button with every purchase), this law was enforced. Now, these laws may vary in different jurisdictions, but this is the most common rule. You'll have to advice your local lawyer about details.

However, if you sell products and services, YOU HAVE to have certain clauses about refund policies. Otherwise, you might be even in a bigger trouble. For e-sellers its even better to make this as a separate policy and present it on a web site separately.

Hope this answers it. :D

Best,