Monday, February 18, 2013

Contracting with larger companies.

When making online transactions, hardly anyone reads terms and conditions in their entirety. Some people gloss over them. Some people do not read them at all. But they do have legal consequences, and in most cases those legal consequences are enforceable.

To a mathematical certainty, those terms and conditions will include choice of law provisions. They will probably include choice of venue provisions and an agreement to arbitrate. Choice of law provisions provide that any dispute over the terms and conditions will be decided by the law of a given jurisdiction, often the jurisdiction in which the company is headquartered. Choice of venue provisions provide that any dispute over the terms and conditions needs to be brought in a particular jurisdiction.
Agreements to arbitrate provide that a dispute needs to be submitted to an impartial arbitrator of the company's choosing before the dispute can be submitted to any court's jurisdiction. Agreements to arbitrate sometimes foreclose any opportunity to resort to the legal process. People regularly run afoul of these common provisions. They will be adversely affected by a product or service they purchased, and will bring suit in their home jurisdiction. They are then surprised to find out that the case is dismissed, because one or more of those provisions are enforced by the court.

Unless a contractual term is particularly egregious or unexpected, courts tend to enforce these agreements so long as the consumer had actual or constructive notice. Actual notice is knowledge in fact of a particular provision. Constructive notice does not require actual knowledge. It simply requires that you had the opportunity to read the terms and conditions and should have known that a particular provision was included.

Large companies often try to bully smaller companies and individuals. They have large legal departments whose job it is to do everything they can to prevent the company from any liability. It is just their job. They are not bad people, but they may end up drafting term provisions that adversely affect other peoples' daily lives.

It is likely impracticable to ask anyone to read -- in depth -- the terms and conditions of every online transaction they make. But it is good to be aware of the provisions you almost always agree to -- choice of law and venue, and agreements to arbitrate any disputes. Even though terms and conditions are onerous, it is prudent to give them at least a cursory reading, because when you check the box that says, "I Accept," you are legally assenting to the given company's terms and conditions.

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