In recent years the internet has transformed the commercial landscape and redefined the way we do business. The movement away from traditional paper and ink has led to the electronification of everything, including the conclusion of contracts. Online shopping, signing up for Uber, creating a Facebook profile – all subject to the familiar “I have read and understand the terms and conditions”- button.
We have all been guilty of mechanically accepting terms and conditions online, without bothering to read it. The question then becomes: are you bound to those terms that you never read, but accepted anyway?
Under common law, the question of whether a contract was concluded, boils down to whether the parties reached consensus on the material terms of the contract. Standard terms and conditions are incorporated into a contract when they are expressly mentioned and accepted (which is usually done by signature) or tacitly through the parties’ conduct. Based on caveat subscriptor, parties will normally be held to the terms of the contract if they signed it, even though they might not have read the terms.
The Electronic Communications and Transactions Act 25/2002 (“ECTA”), which came into force on 30 August 2002, does away with the question of whether an online agreement can be viewed as a contract.
Section 24(2) of ECTA states that expression of intent in a data message is not without legal force merely because it is not evidenced by an electronic signature, but by other means from which a person’s intent can be inferred. In other words, if you click on the “I agree”- button next to the terms and conditions on a website, your assent to those terms can be inferred from the circumstances. Regardless of whether you have read them or not.
These contracts are referred to as “clickwrap contracts” and are usually enforceable.
Other common electronic contracts include “scrollwrap contracts” which require the user to scroll through the terms and conditions before clicking “I agree”. “Browsewrap contracts” are concluded where the user agrees to terms simply by using a website and the terms are available through a hyperlink text at the bottom of the screen. “Sign-in-wrap contracts” usually consists of a sign-in screen that requests a username and password to be filled in and contains text which states that by clicking “sign-in” the user agrees to the terms and conditions.
Although many of these agreements have not been tested by the South African courts, ECTA affords them with express recognition and provides guidelines which aid in determining their enforceability.
Section 11(2) of ECTA provides that information is not without legal force and effect merely on the grounds that it is not contained in the data message purporting to give rise to such legal force and effect but is merely referred to in such data message.
Oftentimes terms and conditions are not prominently displayed on a website’s page, but there is a hypertext link present on the website which redirects users to the terms and conditions (as is the case with the so-called “browsewrap contracts”). The effect of section 11(2) is that regardless of whether a user actually clicked on such link and read the terms and conditions, they may be deemed to have read it and assented to it if the requirements set out in section 11(3)(a) and (b) are met. The requirements in this section establishes an objective test which refers to the nature of the notice and whether it is sufficiently clear and distinctive enough for a reasonable person to notice. In addition, the terms must be accessible in a form so that it can be read, stored and retrieved.
A hyperlink that is small and hidden in an unexpected corner of the website’s page will for example not meet these requirements and a user’s assent to such terms cannot be inferred in such circumstances. On the other hand, if a hyperlink is clearly visible on a webpage, displayed in a large and legible font, the user’s attention is drawn to it and it is accessible, a user will most likely be held to its terms regardless if they ever read the terms or clicked on the hyperlink.
Although there is still a great amount of uncertainty regarding online terms and conditions and their enforceability, internet users would be well advised to view “I accept the terms and conditions”- button, in the same light as signing a lease agreement. You want to know what you are getting yourself into before you sign, and similarly should know what you are agreeing to before you click.
- The Electronic Communications and Transactions Act 25/2002
- Tana Pistorius, Click-Wrap and Web-Wrap Agreements, 16 S. Afr. Mercantile L.J. 568 (2004).
- The Law of Contract In South Africa (Paperback, 3rd Edition), D. Hutchison, C. Pretorius, T. Naude, J. du Plessis, S. Eiselen, T. Floyd, C. Maxwell
This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)