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Saturday, August 15, 2015

Terms and Conditions

The Guardian recently ran an article discussing how impossible it is to read the terms and conditions for everything we use.  The reality is that all of us agree to various terms and conditions for online usage or software every day.

I understand that companies want to protect themselves and provide themselves with the maximum advantage under these terms.  The real fault lies with legislators who fail to provide us with appropriate protections, and courts who enforce terms that don't comport with some of the most basic precepts of normal contract law.

When parties agree to a normal contact, a court will ensure that four basic factors are included:

  1. mutual assent (both parties agree to the contract)
  2. consideration (both parties provide something of value)
  3. capacity (both parties have mental ability to understand the contract)
  4. legality (the contract's purpose must not be against the law).
It is hard to see how terms and conditions can meet these four elements.  For the person "agreeing" to the terms there is often very little evidence that they even understand the terms.  Sure, they have to click a button saying they have read the terms, but we already know that almost no one does that.  It seems a terrible fiction for any court to assume the party really understood what was happening.

Typically, it is hard to come up with how the person accepting the terms is providing much in the way of consideration, unless the terms relate to an agreement to view the advertising or something similar.

Capacity is never known until later.  Many web site viewers are under age.  Many terms and conditions bar children under age 13 from using the site, but there is no way to prevent a younger child from llying about his or her age.  Additionally, the law typically does not recognize capacity until age 18.

Legality is typically not an issue as most sites are engage in legal activities.  Those that are not would probably not expect to have their rights upheld in court.

If terms and conditions are to be considered contracts at all, they are Contracts of Adhesion.  A contract of adhesion is one where one party must simply adhere to the contact on a "take it" or "leave it" basis without any ability to negotiate the terms.  According to the Legal Information Institute at Cornell University: 

"Courts carefully scrutinize adhesion contracts and sometimes void certain provisions because of the possibility of unequal bargaining power, unfairness, and unconscionability. Factoring into such decisions include the nature of the assent, the possibility of unfair surprise, lack of notice, unequal bargaining power, and substantive unfairness. Courts often use the “doctrine of reasonable expectations” as a justification for invalidating parts or all of an adhesion contract: the weaker party will not be held to adhere to contract terms that are beyond what the weaker party would have reasonably expected from the contract, even if what he or she reasonably expected was outside the strict letter of agreement."

In other words, the exact terms of an adhesion contract cannot always be enforced if it is reasonable for the weaker party to expect parts of the terms not to be enforced.

However, when to enforce a clause or not enforce a clause is often left up to the discretion of the judge.  This can make both parties unsure of what rights they will have if terms are truly enforced.  Many terms go even further, requiring parties to use private arbitration rather than courts to resolve any such disputes, meaning a judge may never get to hear the case.  Arbitration also means both parties have to pay for the services, thus making it virtually impossible for many even to afford any sort of challenge.

Software and website owners often go out of their way to make terms and conditions incomprehensible, even if someone is interested in reading them.  Some go on for dozens, even hundreds of pages of small type fine print.  Many of the pages are often completely irrelevant to what you are doing and involve terms for other services you are not using, but combined into a single document.  Other times, the terms may refer to other documents that you need to access and read separately.  So even if you are patient and understand legalese, getting through the documents can be virtually impossible

As a result, most people don't even bother trying.  They click OK and assume that the terms are not unreasonable, won't affect them, or that violations won't get noticed.  They further assume that the web site will not bother to enforce its claims in court and that the worst that will happen is that they get kicked off the site.  For the most part, these assumptions are correct.

So essentially, terms and conditions give software makers or web site owners the right to kick people off their site arbitrarily since almost everyone is in violation of some of the terms.  It essentially gives cover to do whatever they want.  They can violate your privacy, steal any information you may have used in conjunction with their product, sue you for additional licensing fees, avoid liability if your information is lost, destroyed or stolen by hackers.  This PC World article describes some of the real world restrictions you may have unknowingly "accepted."

Sadly, however, many courts are enforcing such terms and conditions as binding contact.  Judges are former lawyers.  They don't mind the complexity and blame the victims for not having had a legal team read every term and condition before proceeding.  They like have a nice set of written terms to parse when making a decision rather than trying to resolve disputes on the vague notion of what is really fair.

But such enforcement raises a great many problems.  Normally businesses have special procedures in place so that only key corporate officers can sign contracts, and only after legal departments have reviewed them.  By contrast, terms and conditions can be "agreed to" by any low level employee or even an independent contractor visiting a site or installing a piece of software that no one has reviewed.  Even if a company goes through the expensive and time consuming process of reviewing and approving terms and conditions, many such terms allow the site owner to change the term at any time without notifying it users other than by posting such changes to the web site.  This means that a company must not only review the terms and conditions once, but continue to review them every day that the site is used by any of its employees. This is, of course, a practical impossibility.  No company could do this, let alone private individuals.

There must, of course, be rules on usage to prevent anarchy.  But the current system of terms in simply unworkable.  Something needs to change.  Holding users hostage to unread and unreasonable terms and conditions in not a viable solution.

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