Your Online Agreement: Got it all wrapped up?

The Online Agreement (and contract) underpins the online consumer and business world. If your organisation is offering online services to its customers or is using other’s online services, understanding its implications for you and your business is key. That is, if you are concerned about good governance, data jurisdiction, risk or brand reputation (yours or theirs).

Your organisation is also a consumer

Evidence suggests that the majority of people routinely click the ‘I Accept’ button without undue delay or consideration of what they are agreeing to online. Nothing new here – especially as individual consumers. We often have no choice.  When downloading a smartphone app, we either accept the terms and download or not.

Question is: What are your managers or staff agreeing to online and in what capacity? If they are acting on behalf of your organisation or acting in an individual capacity can make all  the difference down the line.

The prevalence and persistence of Shadow IT is fertile territory for elevating the potential risks associated with accessing online services. Shadow IT refers to the proliferation of locally sourced IT (typically cloud) systems without enterprise governance oversight.

Is the online agreement worth the paper its written on?

Given that online commerce has only been around for a decade or so, a precise definition of what constitutes and online agreement is still evolving.  Understanding how online agreements are structured can makes all the difference.

The following structures are commonly used:

  • Clickwrap: Users must take specific action such as clicking the ‘I accept’, (or similar) button. However this is no assurance that the user has actually read the agreement terms.  Fact is, most do not.
  • Scrollwrap: Users must scroll down to the end of the agreement, then click the “I agree” button. Once again, evidence is that most users never read the wording of the agreement, let alone take the time to comprehend its contents.
  • Browsewrap: Users are not required to take specific actions. The implication is that they have agreed to the terms. These are usually accessible at the bottom of the webpage through a web link.

But wait, there’s more……

Case in point being a recent lawsuit brought before New York District Court. This related to the purchase of airport WiFi services. This ruling defined a new type of online agreement: the “sign-in-wrap” agreement. Sign-in wrap is a combination of explicitly agreeing to the terms and conditions of the site as part of the registration or signing up to access site.

Legal system playing catch-up?

The bottom line is that the rapid pace of digital change is constantly challenging the relevance of legislation.  The development of meaningful and enforceable legislation invariable lags behind this rapid rate of change.

Not only that, but users mostly pay scant regard for the precisely defined legal jurisdictions in our borderless online world.

Another case in point being the lawsuit brought before the Supreme Court of the Northern Territory (Australia) in 2013. The case of Centrebet Pty Ltd v Baasland dealt with the dual issues of online services (in this case, online gambling) and international jurisdictional issues (in this case a customer (Baasland) who lived in Norway).

Takeaway: To increase the probability of your online electronic agreements being enforceable, it is important to consider cross jurisdictional factors. In addition, ensure that the user takes a deliberate step (such as clicking the ‘I Accept’ button) affirming tacit acceptance.

Will the real you please make yourself known.

The tacit or  deliberate acceptance of an online agreement is based on the principle of nonrepudiation. That is – what was being accepted by an individual online is deniable or not.

Adding another dimension to nonrepudiation is whether the actual person accepting the  terms and conditions is actually who they appear to be.

At the heart of this issues is the vexed question of online identity management – a topic on its own right. This is  fraught with the complexities of privacy legislation and Personally Identifiable Information (PII) across multiple legal jurisdictions.

Given the rapid shift to online service provisioning, the importance of ensuring acknowledgement and adherence to your online agreements  should not be underestimated. More importantly, ensure that they are, in fact, enforceable.

Bottom line is that the world of the online agreement is still evolving, and will most likely continue to be tested and refined as the legal process plays catch-up.

The key takeaway is to  ensure that the processes relating to your online agreements are clear, auditable, robust and enforceable.