Are Online Terms of Service Agreements Legally Binding?

Are Online Terms of Service Agreements Legally Binding?

When you download a mobile application or update the software for your laptop, you are generally presented with a Terms of Service agreement or similar contract. Few pause to read the entire contract before clicking a small box that says “I accept.”

In the age of the Internet, contracts take a number of high-tech forms, but is checking a box really legally binding? The short answer is yes.

Courts across the United States have confirmed that clicking on a checkbox is akin to a signature on a written contract. Essentially, by clicking “I agree” or “I accept,” the consumer provides the mutual assent required to form a legally binding agreement.

While this is the general rule, not all online business agreements will pass muster. For instance, the terms must generally be “conspicuously posted” in order to be enforced. That means the agreement must also be easy to view and navigate. A blurry document or illegible font could render the contract unenforceable.

What the Online Agreement should have

“Given that few people read online agreements in their entirety, some companies have started including clauses that may be surprising to consumers.”

The online agreement should also make it clear that checking the box will result in a binding contract. That’s why most Terms of Service agreements require the user to scroll to the bottom of the agreement prior to clicking “accept.” The check boxes also generally include statements such as” “By clicking ‘Yes’ below you acknowledge that you have read, understand, and agree to be bound by the terms above.” The language is intended to make it expressly clear that clicking the specified box will result in a legal contract.

Courts may also decline to enforce an agreement if the terms are drafted so strongly in favor of one party over the other that they suggest that the contract was not freely bargained. Such agreements, known as contracts of adhesion, are often found to be against public policy and, therefore, void.

Given that few people read online agreements in their entirety, some companies have started including clauses that may be surprising to consumers. As discussed on our Business Law blog, one of the most common provisions is a non-disparagement clause, which prohibits customers from writing bad reviews about them. Other contract clauses impose fees and penalties for failing to comply with the terms of service.

The bottom-line for businesses and consumers is that it is important to take online contracts seriously. For consumers, that means reading the terms of the contract and recognizing that you will be bound by its terms if you click “accept.” For businesses, online agreements, such as Terms of Service, should undergo the same scrutiny as other businesses contracts to ensure that they will be enforced.