Should Consumers Read Online Terms of Service?

I’ve been reading and thinking a lot lately about website terms of service. There’s something unsavory to me about having a contract formed between a website owner and its users by posting complicated legalese on the site and pretending the users read them.

It’s the “pretending the users read them” part that bothers me. Everybody knows consumers don’t read these complicated–and oft-changing–legal documents, yet they form the contract between website and consumer. As Coco Soodek, BigLaw partner and author of the book Birth to Buyout, wrote in a recent post on her Profit and Laws blog, “businesses that pose these contracts have to pretend that they don’t know that you know that they know that you aren’t going to read the contract.” That’s just not a good basis for an agreement that’s supposed to reflect a “meeting of the minds” of the website owner and the user (an essential characteristic of an enforceable contract).

As someone who drafts website terms of service, I completely understand why they are complicated as well as why they are necessary. The relationship between website owner and user is actually quite complicated from a legal perspective, and there’s simply no way to boil the complexity and nuances down to a simple document. But the fact that users don’t read online terms is a problem because they don’t know what they’re agreeing to.

Courts have used traditional contract principles to hold users to terms of service even when they haven’t read them. For example, in a fairly recent case which I commented on in this post, the court stated that “failure to read an enforceable online agreement, as with any binding contract, will not excuse compliance with its terms.” Many other courts have considered whether users should be bound to online terms of service and have held them to be binding except in some cases where the website users didn’t have sufficient notice of the terms or where end-user consent to the terms wasn’t clear enough.

Yet something seems amiss when people routinely enter into these contracts without knowing what they’re agreeing to. If it were just a matter of people foolishly neglecting to read a contract, it wouldn’t be such a concern. But the fact is that it would be well nigh irrational for a consumer to read every set of terms and conditions he or she was presented with. I suspect it would take the average person many, many hours to read all the terms of service they are already bound to. And that doesn’t include the time required to monitor the legal disclosure page of all the various services they use in order to make sure the terms haven’t changed. Plus, when the terms do change, the consumers would have to read them all over again.

Perhaps, in most cases, there is no real harm for consumers not to know what they’re agreeing to. Many of the reported cases deal with matters such as arbitration, choice of law, and venue provisions. In other words, provisions which would not make a difference to consumers’ decision to click “I accept” and which website owners wouldn’t be willing to negotiate anyway. In addition, consumers might be protected by traditional contract principles relating to adhesion contracts, which protect consumers from unreasonably nasty provisions they wouldn’t expect to find if they did read the contract closely.

What do you think? Is it a big deal that end-users don’t read terms of service and that it would be a significant time burden for them to do so?

In Category: E-Contracting

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Show 6 Comments
  • Jim Brashear October 6, 2011, 5:38 pm

    By the time consumers are presented with the TOS, they have already made the initial decision to purchase a product or service. Unless the TOS contains something particularly onerous, it likely will not affect that purchase decision.

    It does not seem to be worth the investment of time and effort for most consumers to closely peruse the TOS when you consider:

    (a) the consumer has no practical ability to change the TOS – it’s take it or leave it;

    (b) they cannot easily glean the important provisions from long boilerplate, and may not understand or care about the bulk of the provisions;

    (c) it isn’t likely to be onerous, because an onerous TOS will not last long in the market (unless the consumer has no other practical choice but to accept the TOS);

    (d) if there is no practical choice but to accept an onerous TOS, then it may well be an adhesion contract.

    • Brian Rogers October 6, 2011, 5:41 pm

      Jim: The brouhaha over the Dropbox TOS certainly demonstrated that the market can clear out an onerous TOS! One interesting thing about that situation is that Dropbox seemed to go out of its way to summarize the important changes to its TOS in the language of the people. Whether the summary is accurate (and its legal status) has made for a lot of entertaining commentary in the blogosphere.

      I agree that it’s usually not worth it for consumers to read the TOS. That’s why I typically don’t bother. I’m not particularly lazy about that sort of thing, and I have a professional interest in the documents as well as how they’re presented to consumers. Still, I generally don’t read them when I’m signing up for something.

      I can sleep at night knowing that, although I’d almost certainly have to arbitrate or litigate any claim in some place other than St. Louis, if Dropbox slipped a clause into its TOS providing that I agreed to transfer title to my car if I clicked “I agree,” I’d be able to keep the keys.

      I still find the whole exercise troubling. The closest analog in other contracting situations I can think of is the battle of the forms scenario, where the parties exchange ordering and acceptance documents without reading the related fine print. But in those cases the law generally works things out so that a party that wants to protect itself from onerous contract terms can do so by introducing its own boilerplate.

      • Jim Brashear October 7, 2011, 5:43 pm

        Maybe we’re rationalizing, but I don’t read them either. Same for car rental agreements, airline conditions of carriage, etc. etc.

  • Coco October 10, 2011, 5:45 pm

    I read TOS, but only to see what other lawyers are doing (I also read consumer warranties). But, I confess – I never read mortgage documents I sign, probably because I don’t write mortgages.

    Not reading it is my choice and I think I ought to be responsible for contract terms I accept. But, I’m a lawyer and I can read them. Most people are like brand new lawyers – not familiar with the odd rhythm of a contract and confused by it. So, that makes it an unfair playing field. Things get even more unfair if Concepcion is used to create a business method thru which companies can swindle their customers out of small dollar amounts without recourse, because people don’t read the contracts and, even if they did read them, the contracts all say the same, unfair things.

    What we need is a uniform set of “incoterms” for consumer contracts. I should get right on that.
    Coco

  • Silvia DAmico March 7, 2014, 5:59 pm

    Question: I have seen clauses similar to this: “Any use of the website by a User after the revised ToS are posted will indicate that the User agrees to such change”, where there is no mention that the website owner will notify the user. After a change in ToS is implemented, is the website owner required to inform the user about it?

    • Brian Rogers March 8, 2014, 10:50 am

      That’s a better practice if you want your terms to be enforceable. Zappos got tripped up by reserving the right to change its ToS without notice and a court refused to enforce them.

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