Terms and Conditions - research
- Zoe Timbrell
“The legal effect of online agreements may be an emerging area of the law, but courts still apply traditional principles of contract law and focus on whether the plaintiff had reasonable notice of and manifested assent to the online agreement.”
When a contract is formed electronically
A contract is formed:
by email or text, when the acceptance email or text arrives at the seller's email address or mobile number — not when it's read or sent
when you buy something online, either after you see an order confirmation page or receive email confirmation
for online auctions, eg Trade Me or eBay, when the time limit set by the seller is reached and the highest bidder has met the reserve price. The highest bidder must complete the purchase at that point.
If you buy something online from an overseas seller, your rights may still apply, but resolving issues and claiming your rights can be difficult.
https://www.consumerprotection.govt.nz/general-help/consumer-laws/online-safety-laws-and-rules/
Key requirements for online terms
Four key requirements for general website terms (such as typical disclaimers available via a link to terms of use), are that:
The link to the terms of use should be prominently displayed on all relevant pages;
It should be easily identifiable as a link to terms of use (e.g. not just included in a link entitled “About Us”);
There should be some form of version control and records kept, in order to be able to prove at a future date that a certain form of terms and conditions (and notice of them) was in place; and
The terms and conditions themselves should be “reasonable” in the circumstances.
It is good practice that users be required to expressly agree to additional terms, covering the additional services provided to registered users, in the registration process. Having the additional terms in a separately agreed contract has the benefits of:
Allowing the inclusion of terms which may otherwise be considered “onerous” if they were simply included in general “disclaimer” terms of use (e.g. a restocking fee); and
Under contract law, enabling a court to interpret disclaimer terms more favourably to the website operator than if they were contained in general website terms.
Whenever you click “I accept” to a website’s Ts & Cs, you are entering into an online contract known as a “clickwrap” agreement.
Alternatively, you may not have even been required to take any affirmative action to accept the Ts & Cs. A website may only provide a hyperlink to its Ts & Cs or simply just post them somewhere on the website – this is known as a “browse-wrap” agreement.
The New Zealand courts have not yet addressed the enforceability of online contracts, and although the Contract and Commercial Law Act 2017 facilitates the use of technology in commercial transactions, the Act does not state how or when an online contract is formed. This has left some uncertainty about the potential enforceability of clickwrap or browse-wrap agreements. However, two recent court cases in the United States have addressed this issue. Although these cases are not binding on New Zealand courts, they may provide some guidance on how these types of agreements will be treated in New Zealand.
Both cases involved a browse-wrap agreement. In the first case, a website had placed a hyperlink to its Ts & Cs on the bottom corner of each page of the website and right next to a button the customer had to click before completing the online purchase. The online sale in question fell through due to insufficient stock, at which point the website attempted to enforce its Ts & Cs against the would-be customer. No affirmative action, which may indicate acceptance of the terms and conditions, was required of the customer before the purchase was completed. The court ruled that the website’s Ts & Cs were not enforceable because the website had not provided adequate notice of them to the customer. The court stated "where a website makes its terms of use available via a conspicuous hyperlink on every page of the website… even close proximity of the hyperlink to relevant buttons users must click on - without more - is insufficient to give rise to constructive notice."
In the second case, the United States District Court (“Court”) refused to enforce Uber’s online terms of service due to the manner in which the terms were presented on Uber’s smartphone app. A hyperlink to Uber’s terms was provided on Uber’s registration page with the words "By creating an Uber account, you agree to the terms of service" next to it. However, the hyperlink and accompanying words were considered to be “barely legible” by the Court as they were in significantly smaller font to the rest of the app. The Court held that the existence of Uber’s terms were not adequately brought to the attention of the user, and, therefore, it could not be said that the user had ever agreed to them. Again, it was the lack of notice given to the user of the website’s Ts and Cs which ultimately led to them being unenforceable.
Both cases highlight the fact that the basic requirements for a contract (for example “acceptance”) are not diminished just because the contract is formed online. However, neither case shed any light on what may constitute adequate notice of a website’s Ts & Cs.
Although both browse-wrap agreements were unenforceable in the United States cases, each agreement, whether browse-wrap or clickwrap, will be assessed on a case-by-case basis. Enforceability will be determined by whether the basic elements of contract formation are present, including whether a party has been given sufficient notice of the Ts & Cs. As the United States’ courts have shown, it will be hard to enforce an online contract when one party has not been given a proper opportunity to read and consider the Ts & Cs of the contract before accepting it.
It may be argued that clickwrap agreements are more likely to have the requisite notice because a user is required to take some form of positive action indicating acceptance of the Ts & Cs. However, it will still very much be a case-by-case determination. We suggest best practice is to treat each type of online agreement you enter into as binding and to ensure you have read and understood all online terms and conditions before continuing any further in an online transaction.
Please note that the Fair trading Act 1986 was not discussed in this article and that the unfair contract terms provisions in that Act may also affect the enforceability of online contracts.
https://www.glaister.co.nz/articles/how-enforceable-are-those-online-ts-and-cs-we-all-accept/
With the rise of technology, it is usually easier and faster for an agreement or terms to be accepted electronically, as opposed to the traditional signing of a physical document. However, how reliable is that electronic signature/acceptance if a dispute arises between the parties?
An ‘electronic signature’ can take many forms including a scanned image of the signature, a mouse mark on a screen, a signature signed by way of a stylus, or by a person agreeing to the terms and conditions by ticking a box on a web form which expressly provides that the person ticking the box agrees to be bound by all the relevant terms. For an agreement to be binding, the person agreeing to the terms must be able to read the terms before accepting them.
Electronic signatures are, arguably, less secure than a traditional signature because of the possibility of a third party intercepting the electronic document and extracting and using that signature. There is also no verification of who actually signed it.
The electronic transaction provisions of the Contract and Commercial Law Act 2017 provide that an electronic signature needs to be ‘as reliable as is appropriate’. This is assessed by whether:
The means of creating the electronic signature is linked to the signatory and to no other person
The means of creating the electronic signature was under the control of the signatory and of no other person
Any alteration to the electronic signature made after the time of signing is detectable, and
Where the purpose of the signature is to provide assurance of the integrity of the information to which it relates, any alteration made to that information after the time of signing is detectable.
Whether an electronic signature ‘is as reliable as appropriate’ depends on the circumstances. Where the sums involved are large and you have concerns about the enforceability of an agreement, it’s likely you would want to reduce the risks attached to electronic signatures. In this case, a ‘digital signature’ which incorporates increased security measures, is likely to be more appropriate.
A digital signature is a form of electronic signature which is more secure (less likely to be copied and the document less likely to be changed when emailed) than the above-mentioned forms of electronic signatures. A digital signature is produced using identity verification and is bound to the document with encryption.
https://nzlaw.co.nz/news/electronic-signatures-uses-and-risks/
We need to say
By clicking Send you agree to the Terms and conditions in large enough writing and close to the click button with the hyper link to the T&Cs.
Website T&Cs https://simmondsstewart.com/template/website-terms-of-use-2016-09-16.pdf