The purpose of a written agreement is to serve as evidence of the bargain reached between two or more parties, and it should always be carefully crafted to properly reflect their objectives. This advice, however, is usually weighed against the practicality of spending the time and effort to do so, particularly for uniform or smaller transactions, or where the parties do not actually negotiate. For this reason, standard form agreements (also known as terms and conditions or “click-wrap”, “shrink-wrap” and, more recently, “Web-wrap” agreements) have been adopted as part of common practice by many businesses. But after one online retailer’s April Fools’ Day prank, a question some might ask is: Do standard form agreements represent a danger to the parties’ immortal souls?
Standard form agreements are pre-printed terms and conditions applicable to a business transaction drafted by one party or another that are required to be accepted by the other party as part of the transaction. For example, they might be attached to a purchase order or sales invoice dictating the terms under which the transaction might take place. Implicitly, by accepting the order or making the sale, the parties agree to the agreement. In a shrink-wrap context, the agreement typically appears on the outside of a retail software package, stating that by opening the package or installing the media contained therein, the customer agrees to be bound by the terms of a written license. Click-wrap and Web-wrap agreements are very familiar in the Internet era. They are displayed during the installation of software or in the course of an online transaction, and require a box to be checked or a button to be clicked in order to indicate the user’s consent to be bound by the agreement before proceeding.
For businesses conducting multiple, uniform transactions, these standard form agreements are an invaluable tool to placing parameters, limits of liability, usage policies and other terms and conditions on the sale or use of their goods and services. Large-scale purchasers often use them as well, to dictate the terms on which they acquire goods and services. However, the usefulness and ubiquity of standard form agreements have revealed many potential problems respecting their enforceability: (1) they are so commonly used that, frequently, nobody reads them before accepting them; (2) they are used as generally-applicable business documents, so they often contain provisions that are difficult to comprehend or inapplicable in the particular transaction, and, (3) because of their purpose, there is a tendency to draft them in a manner that heavily favours the drafter (i.e., the business).
On April 1, 2010, online retailer UK video game company Gameplay (GB) Limited, doing business as Gamestation.co.uk, demonstrated the problems inherent in standard form contracts through an April Fools’ Day prank of Faustian proportions. Gamestation added a very interesting clause to its online terms and conditions: By placing an order on April 1, purchasers granted to Gamestation a non-transferable, perpetual option “to claim, for now and forever more, your immortal soul”. Such purchasers agreed to surrender said soul within 5 business days of written notification by Gamestation “or one of its authorised minions”; and while such notice could be delivered by way of notice through “6 (six) foot high letters of fire”, purchasers agreed that Gamestation had no liability for damages caused by that act. At the end of the paragraph, purchasers were told that they could click on a link to nullify the provision (and, upon doing so, were rewarded for their vigilance with a voucher code that had a value of £5.00).
Not surprisingly to anyone who works with standard form agreements, Gamestation gave out very few vouchers according to news reports, estimating that just over 10% of people who made purchases read the terms and conditions. Practically speaking, it is also likely that word of mouth of the prank spread over the Internet, increasing the use of the voucher by people who had not, or would not have otherwise, read the terms and conditions. Thankfully for Gamestation’s customers, Gamestation is apparently sending out e-mails to its customers abandoning its rights to claim their immortal souls.
As humorous as the example may seem, the “immortal soul” prank should serve as a reminder to businesses that, as tempting as standard form agreements are to use, there is a careful balancing act to be made within them. The clause not only contained a very unexpected and (depending on one’s beliefs) onerous clause, it actually presented an opportunity for customers to gain significant advantage - saving money - to opt out, and yet few people read and took advantage of it. While the example is ridiculous, it raises the important issue of enforceability.
There is a relatively sparse body of Canadian law dealing with the modern click-wrap, shrink-wrap and Web-wrap agreements, but the common law of standard form agreements and legislation regarding consumer protection should always factor into their drafting and use. From this body of law, we would be remiss if we did not provide a reminder on standard form principles as applied to, tongue firmly in cheek, an “immortal soul” clause:
- The business should take reasonable steps to attempt to bring the terms of the agreement to the attention of the customer, and the customer should have a reasonable opportunity to review and, potentially, reject such terms (thereby rejecting the offered goods or services). If the “immortal soul” clause is not visible or available during the transaction process, or if a customer cannot reject the transaction, it will not likely be enforceable.
- If possible, the customer’s positive acceptance of the terms and conditions should be recorded. For example, to have a valid claim over customers’ souls, a business would be well-advised to provide a separate check-box during the ordering process where the customer explicitly agreed to grant the option. Not only does this step serve as further evidence to increase its enforceability, in some instances it may be required by law (for example, under privacy or consumer protection legislation).
- Important, unexpected, unusual or onerous terms should be clear and placed conspicuously to draw the customer’s attention to them. Marketing, promotional and other materials should, if possible, draw the customers’ attention to these provisions and should always be consistent with, and not confusing when compared against, the agreement. An “immortal soul” clause should be placed somewhere that a customer might most likely look, and should be conspicuous (for this reason, these agreements will frequently capitalize or use a bold font with important terms such as limits of liability, disclaimers and indemnities).
- If the customer is in another jurisdiction, the business should consider whether laws applicable to that customer might apply to the transaction, or affect the validity of the agreement or its enforceability. For example, an agreement with an “immortal soul” clause might not be enforceable against a Quebec resident for failure to comply with the Charter of the French Language’s bilingual requirements.
- Careful drafting is often difficult in light of the general applicability of standard form agreements to various transactions, but it is incredibly important. One must always be mindful of the general rule that any ambiguity in the language of a contract will be interpreted against the drafter. As an example, if a business wanted a customer’s soul free and clear of any prior claims, it should likely state so.
- Amendments to standard forms invariably raise enforceability concerns, both in their applicability and the questions they raise about the deal reached between the parties. For example, if amendments can be made at the business’s will and without notice and opportunity of rejection, how can an agreement truly have been said to have been reached between the parties? How do amendments apply to ongoing services, or to services previously rendered? How much attention should be drawn to amendments for customers who frequently place orders?
- The urge to draft heavily one-sided provisions should be resisted where possible, and should be blatantly highlighted (and perhaps even separately consented to) if necessary. Customers do not have an opportunity to negotiate these terms and conditions, and a court will be unlikely to enforce terms of a contract that are unfair, unconscionable or contrary to public policy or give excessive advantage to the drafting party. Without even getting into the issue of whether a court would recognize one’s immortal soul as tangible or intangible property capable of transfer, an “immortal soul” clause would likely fail the public policy test.
Standard form agreements are very useful business tools, but businesses should always be mindful of the courts’ interests and equitable powers to enforce the actual bargain reached between the parties, to uphold the public good, and to protect consumers and perhaps even their immortal souls.