How Enforceable are Online Terms and Conditions?

30 April, 2020 | Bret Gower

At what point are you considered to have accepted the terms and conditions on somebody’s website or app? Are you bound by their terms and conditions nzs just by their webpage with your browser?

This question in the physical world (as opposed to online) is one of acceptance. Have you accepted the offer made to you? Traditionally this is strictly a question of contract interpretation, and is considered a definitive factor as to whether a contract has been formed. The issue is whether the parties have agreed to anything, what is known as being ad idem – or whether there has been a “meeting of the minds”. Courts have traditionally considered this to be an indication of the intention of the parties.

The question, in relation to online contracts, has not been addressed in the New Zealand courts, however there are precedents, mainly from the United States, that are informative on how the subject might be decided in New Zealand.

There are generally two types of “acceptance” in the online world that you should consider, either as a user of somebody else’s website or as a provider of services on your own website. These are what are known as “browse wrap” and “click wrap” contracts.

Browse Wrap Agreements

A “browse wrap” contract is usually presented on a website using a phrase such as “by using this website you agree to our terms and conditions”. In this situation the words “terms and conditions” are usually treated as a hyperlink to either a page or PDF containing that business’ terms and conditions.

Click Wrap Contracts

By comparison, a “click wrap” contract will either open as a pop-up while using a website, or as a screen on an app that requires you to click a tick box, alongside a statement such as “yes, I agree to the above terms and conditions.”

The exact form of how these two contractual mechanisms are presented has been the subject of a number of court cases in the United States, which we expect to determine the outcome of similar cases in the New Zealand context.

There are two pieces of New Zealand legislation that interact with these types of contract. One is the Contract and Commercial Law Act 2017, and the other is the Fair Trading Act.

Our commercial contract law team is experienced with drafting and updating website terms and conditions (sometime called “terms of use”) across a wide range of industry types and business models. If you are looking for guidance as to whether your terms and conditions, and the way they are presented on your website, are enforceable under New Zealand law please contact commercial solicitor Bret Gower on 09 837 6893 or email bret.gower@smithpartners.co.nz.

Fees to review and/or draft online terms and conditions tailored to your requirements range between $1,600 to $2,000 and generally take between 5 to 10 working days to first draft stage depending on the actual work involved and a range of other factors.*