In the last decades, we’ve experienced a digital revolution: almost all our daily activities are available online. That includes concluding agreements, also those with other entrepreneurs. In that context, it’s necessary to understand what requisites must be satisfied to make the contracts concluded online between businesses enforceable. The question is of particular importance when we use online general terms and conditions (and, therefore, when we propose to the other party a ready contract form, usually the same we give to everyone else, and which is not negotiated between the parties – like the general terms and conditions present on the website).
Note well that the requirements vary depending on whether the contract is concluded between businesses or with a consumer. Specifically, the consumers must be ensured greater protection. To check out the requisites in case of the terms and conditions directed (also) to the customers see this article.
What does the EU law say?
The principal rule for the online terms and conditions is laid down in art. 10 par. 3 of the Directive 2000/31/EC on electronic commerce. According to that article “contract terms and general conditions provided to the recipient must be made available in a way that allows him to store and reproduce them”.
More restrictive rules are provided for certain clauses that may particularly harm the other party. An example of such a clause at the European level may be the jurisdiction clause. More precisely, Brussels I Regulation, in art. 25 (art. 23 of the previous version of that Regulation) sets forth that “the agreement conferring jurisdiction shall be either: (a) in writing or evidenced in writing; […] or (c) in international trade or commerce, in a form which accords with a usage of which the parties are or ought to have been aware and which in such trade or commerce is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade or commerce concerned”. Furthermore, in the second paragraph that article states that “any communication by electronic means which provides a durable record of the agreement shall be equivalent to ‘writing’.”
Interestingly, in the case of the B2B contracts, “durable record” may be understood less strictly than in the case of consumer contracts. There are (few) sentences that clear that up.
What does the CJEU say?
While in the EU the court’s sentences aren’t generally binding as in the common law systems, they may be useful to interpret the laws and predict future verdicts.
Unfortunately, there aren’t many EU sentences to guide us through the articles mentioned above. There is one, however that may be useful. The Court of Justice of EU, in the sentence of 21 May 2015, case C-322/14, Jaouad El Majdoub v. CarsOnTheWeb.Deutschland GmbH ruled that “[…] the method of accepting the general terms and conditions of a contract for sale by ‘click-wrapping’, such as that at issue in the main proceedings, concluded by electronic means, which contains an agreement conferring jurisdiction, constitutes a communication by electronic means which provides a durable record of the agreement, within the meaning of that provision, where that method makes it possible to print and save the text of those terms and conditions before the conclusion of the contract”.
The case regarded two car dealers: (i) the buyer and plaintiff, Jaouad El Majdoub, and (ii) the seller and defendant, CarsOnTheWeb.Deutschland GmbH. The plaintiff claimed that the jurisdiction clause was not validly incorporated into the terms and conditions proposed by the vendor because the contract concluded between the parties was executed through the so-called click-wrapping (when the user has to click to express its acceptance of the terms and conditions) and the terms and conditions did not appear automatically. Instead, the user had to click on a link to view the agreement. The plaintiff believed the jurisdiction clause agreed upon in that way didn’t satisfy the requested written form set forth by the Brussels I Regulation.
However, in the above-cited sentence, the Court disagreed with the plaintiff. It stated that the form of the general terms and conditions present on the website of the seller accessible through an additional link comply even with the strict form established by the Brussels I Regulation for the jurisdiction clause. All the more reason, “click-wrapping” should be considered to comply with the general form of the terms and conditions which “must be made available in a way that allows […] to store and reproduce them” according to art. 10 paragraph 3 of the E-commerce Directive.
Consequently, based on the above ruling, it seems that in the EU the general terms and conditions, including also a jurisdiction clause, accepted through the “click-wrapping”, are binding and enforceable.
What do (some of) the Member States’ courts say?
ITALY
There is an interesting decision of the Italian Court of Cassation of 19 September 2017, no. 21622 that confirmed enforceable the general terms and conditions referred to through a link (and, therefore, not even click-wrapping). In particular, the purchase order form may include just a reference to the general terms and conditions, indicating a link where they may be found and which the purchasing company must type in the browser manually: and they will still be enforceable.
Specifically, according to the Court “the observations […] that a simple “click” on the corresponding link was not enough to generate the screen containing the general conditions of the contract, but it was necessary to type the address indicated, are not sufficient to exclude the clarity of the clause itself and its acceptance by the subscriber of the purchase order”. The case in question took place between two companies that entered into a contract by exchanging forms via email. In particular, the client signed an order form in which the general conditions of the contract were referred to by indicating the link in which they were reported. The Court of Cassation ruled that the general contract clauses are effective because, indicated through a link, could be known to a client who would have acted with ordinary diligence.
IRELAND
Ryanair initiated two quite similar cases against two travel agencies: On the Beach Limited and Billigfluege De Gmbh. The two online travel companies used screen scraping to extract data from the website of Ryanair to book flights for their customers through those travel agencies (instead of directly by the customer accessing Ryanair’s website). Ryanair brought cases against both these companies before an Irish Court, according to the jurisdiction clause in the terms and conditions present on Ryanair’s website. Both travel companies contested the jurisdiction of the Irish Court.
In the case Ryanair Limited v On the Beach Limited [2013] IEHC 124 the Irish High Court held that “there is a practice in the airline and online travel agency sectors of contractually binding web users by click wrapping or browse wrapping, which practice is generally and regularly followed by the operators in those sectors” Therefore, it seems the Court referred to the “form which accords with a usage of which the parties are or ought to have been aware” provided by art. 23 of the Council Regulation (EC) No. 44/2001 (previous version of the Brussels I Regulation) and allowed for the enforceability of the general terms and conditions made available on a website (browse-wrapping), as a normal business practice. The sentence was later upheld by the Supreme Court.
A similar decision was made in the case Ryanair Ltd v Billigfluege De Gmbh [2015] IESC 11, where the Supreme Court (and before the High Court) admitted the enforceability of the jurisdiction clause against the travel agency visiting Ryanair’s website.
By the way, beyond any considerations regarding the enforceability of the jurisdiction clause in case of browse-wrap agreements, these sentences are worth noting also in the context of the screen scraping activities and the possibility of being bound by the terms and conditions even if the scraping is made through automated software.
Conclusions
The general rule that the contract terms and general conditions must be made available in a way that allows the client to store and reproduce them (art. 10 para. 3 of the E-Commerce Directive) seems to be satisfied when they are simply made available on a website.
Importantly, the jurisdiction clause, which requires making agreement available on a “durable record” was admitted by the CJEU and the Member States’ courts as complied with when made available on the website, in case of clickwrap agreements. Furthermore, some courts (like the Italian Court of Cassation) may consider validly enforceable also when the terms and conditions are only referred to in a link indicated on the purchase order. Finally, certain courts (like the Irish High Court) may also consider enforceable the browsewrap agreements even in the jurisdiction clause, when such use constitutes a normal business practice.
In any case, taking into account the uncertainty of the situation, to avoid problems you may want to:
- ensure your business client can expressly accept the general conditions. For example, if the order is placed through a website, you could go with the click-wrapping and make it possible to accept the terms and conditions with a click. Otherwise, if the orders are placed, for example, with e-mails, you could either always send the terms and conditions to the client (at least at the beginning of your business relationship) or at least insert a link to the general terms and conditions, preferably “clickable”, in your email/order and require from the client an additional and specific acceptance of these terms and conditions;
- notify customers of any changes in your general conditions;
- make the general terms and conditions fair and reasonable; and
- in the event you change your general conditions, make all the previous versions of the same available to your customers (in a way they can see which version was binding in the specific moment of your business relationship).