There is a growing trend among businesses to use a hybrid contractual model when selling products to their customers. That is, companies are using signed and printed agreements in conjunction with standard terms and conditions that are posted on the companies’ website.
Rather than provide a separate paper copy of the terms and conditions to the customer, the company will post the terms and conditions on its website and incorporate the terms by reference into the printed contracts and/or purchase orders that are signed by the customer.
Because this trend is fairly new, the number of courts that have ruled on whether the terms and conditions are legally accepted by the customer is sparse. At least five (5) courts have enforced online terms and conditions that were incorporated by reference into the parties’ written contract. Pennsylvania is one of the states where a court has found that this method creates a legally enforceable contract between the company and its customer.
To insure the greatest likelihood that online terms and conditions incorporated into a signed agreement are sufficient and binding on the signing party, there are four (4) general guidelines that should be adhered to:
- The signing party must get adequate notice that the proposed terms and conditions exist. Before the contract is signed, put the signing party on notice that the terms and conditions are available online and provide a website link directly to the terms and conditions.
- The signing party must get a meaningful opportunity to review the terms and conditions before the contract is signed. Waiting until after the contract is signed to direct the signing party to the online terms and conditions may result in a court finding that the terms and conditions are not a term of the contract.
- The signing party must get adequate notice that taking a specified action will manifest its assent to the terms and conditions. For example, the contract might provide that paying for the specified product will result in the signing party agreeing to be bound by the terms and conditions that are available on the company’s website.
- The signing party takes that specified action (i.e., the signing party actually pays for the specified product).
Of those four (4) general tenets, the most critical is that the terms and conditions are communicated and made available to the signing party before the agreement is executed. If you direct the customer to the terms and the customer voluntarily chooses to ignore or not read them before signing the contract, most courts will enforce the terms since the customer had the opportunity to review them before signing its name. Failure to read contract terms is generally not an excuse that courts will accept when asked to void a contract or its terms.