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How To Create Enforceable Online Contracts

The pandemic has forced companies to dramatically increase the amount of business they do in cyberspace. Along with that, there has been a profusion of online contracts such as:

  • Privacy policies

  • Terms and conditions

  • End-user agreements

These contracts explain customers’ obligations and rights, protecting both companies and consumers. Although every company thinks they're crystal clear, that hasn't stopped the court system from being bombarded with hundreds of lawsuits challenging the enforceability of companies’ online terms and conditions.

Most businesses just assume that these contracts are always enforceable. However, that isn't true in every case. If you want to make reasonably certain your online agreements are binding, there are a few things you must do.

Mutual Assent

Whenever there's a question about whether a contract is enforceable, it comes down to whether mutual assent exists among all parties. Courts have favored finding a binding agreement whenever a party has had reasonable notice and an opportunity to review the contract's terms.

That's why when you create your online contracts, you shouldn't allow your customers to manifest assent without first presenting them with the terms of the agreement. This can either automatically appear or when the party clicks an easily found hyperlink.

It’s best to use technology that won’t let a user consent to the agreement until he has successfully navigated past all the terms. This could be something like adding a sentence at the point of purchase that states, "By clicking the "Purchase" button, you agree to the terms of use," along with a hyperlink to the terms.

You need to make sure the user can save or print the agreement if he so desires. By using this method, the chances that a court will deem your contract enforceable are significantly increased.

Have a Signature Box

To make it even more likely the contract will be enforced, companies should require parties to scroll to the bottom of the terms. After doing so, there should be a prompt to type their name into a signature box before they click the "I Agree" button.

This is a more unequivocal way to manifest assent than merely checking a box.

The Importance of Clear and Conspicuous Terms

The format and content of the terms can significantly affect how enforceable an online contract is. That’s why contract terms must be clear and conspicuous as possible.

One of the ways lawyers have accomplished this over the years is by writing their contracts using all-caps. You can add clarity by using bold, italicized, colored, and highlighted font.

Agreements should appear on an uncluttered screen to minimize the possibility a term will be overlooked, or someone will make the argument that the print was hidden.

Keep Meticulous Records

A court is going to just take your word for it that you’ve given a customer reasonable notice and an opportunity to review the terms of an agreement.

That’s why you need to keep meticulous records showing the terms of use on any specific date. This is particularly important if your terms have significantly changed over time.

Your records also need to indicate what interactions were required for the customer to manifest his acceptance on that date.

How Emerald Law Can Help

At Emerald Law, we specialize in helping entrepreneurs just like you successfully navigate the legal minefields that invariably pop up during the ordinary course of business.

Whatever assistance you need, we’ll be with you every step of the way, ensuring your company is protected. That way, you’ll be able to give your full attention to what you do best, which is growing your business.

Call us today!


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