Mobile Applications | This article was reviewed by author(s), and the law is current as of March 13, 2018.

Kimberly Culp

How to Craft Enforceable Terms of Use for Mobile Applications

Most mobile applications, just like most websites, incorporate terms of use into the application somewhere. This document, at best, is intended to form a contract with the consumer. As we know, terms of use can help a company avoid distracting, time-consuming, and expensive litigation, as they often include class action waivers, mandatory arbitration provisions, jury waiver, choice of venue provisions, and/or choice of law provisions.

 

Whether a term of use is likely to be enforced as a contract by a court depends on whether the company can prove that the user consented to the documents (e.g., whether a contract was entered into). Whether a company can demonstrate that a contract has been entered into turns primarily on the design of the mobile application.

 

Definitions: Browsewrap and Clickwrap

The case law assessing the enforceability of terms of use regularly refers to “clickwrap” and “browsewrap” to describe the design of the process of consent to the terms of use. Nguyen v. Barnes & Noble Inc., 763 F.3d 1171, 1175–76 (9th Cir. 2014) (“Contracts formed on the Internet come primarily in two flavors: ‘clickwrap’ (or ‘click-through’) agreements, in which website users are required to click on an ‘I agree’ box after being presented with a list of terms and conditions of use; and ‘browsewrap’ agreements, where a website’s terms and conditions of use are generally posted on the website via a hyperlink at the bottom of the screen.”)

 

“Clickwrap agreements are generally defined by the requirement that users ‘click’ some form of ‘I agree’ after being presented with a list of terms and conditions.” Plazza v. Airbnb Inc., 2018 WL 583122, *6 (S.D.N.Y. Jan. 26, 2018).

 

A browsewrap is an agreement whereby a customer “assents to the contract when the user visits the web site.” See Register.com, Inc. v. Verio, Inc., 356 F.3d 393, 429 (2d Cir. 2004). “‘The defining feature of browsewrap agreements is that the user can continue to use the website or its services without visiting the page hosting the browsewrap agreement or even knowing that such a webpage exists.’” Nguyen, 763 at 1176. “‘Because no affirmative action is required by the website user to agree to the terms of a contract other than his or her use of the website, the determination of the validity of the browsewrap contract depends on whether the user has actual or constructive knowledge of a website’s terms and conditions.’” Nguyen, 763 at 1176. “Whether a user has inquiry notice of a browsewrap agreement … depends on the design and content of the website and the agreement’s webpage …. Where the link to a website’s terms of use is buried at the bottom of the page or tucked away in obscure corners of the website where users are unlikely to see it, courts have refused to enforce the browsewrap agreement. On the other hand, where the website contains an explicit textual notice that continued use will act as a manifestation of the user’s intent to be bound, courts have been more amenable to enforcing browsewrap agreements.” Nguyen, 763at 1177. The “proximity or conspicuousness of the hyperlink alone is not enough to give rise to constructive notice.” See Nguyen, 763 at 1178. Browsewraps are a common feature in mobile applications because consumers often want to access the application as soon as it downloads.

 

“[B]rowsewrap agreements are not presumptively unenforceable.” Plazza, 2018 WL 583122 at *6.

 

Design: What Will Courts Enforce?

In Nguyen, there was no evidence that “the website user had actual knowledge of the agreement” and, thus, “the validity of the browsewrap agreement turn[ed] on whether the website put[] a reasonably prudent person on inquiry notice of the terms of the contract.” 763 F.3d at 1177. The Court found the browsewrap in unenforceable and held that “where a website makes its terms of use available via a conspicuous hyperlink on every page of the website but otherwise provides no notice to users nor prompts them to take any affirmative action to demonstrate assent, even close proximity of the hyperlink to relevant buttons users must click on—without more—is insufficient to give rise to constructive notice.” 763 F.3d at 1178–79. In other words, following Nguyen it is advisable to require an affirmative act of consent to terms of use.

 

Thus, in Long v. Provide Commerce, Inc., 245 Cal. App. 4th 855 (2016), a California Court of Appeal declined to enforce an arbitration provision in the website terms of use. Those terms were located in a hyperlink at the bottom of the website and at the bottom of the checkout flow page. They were in “a light green typeface on the Web site’s lime green background.” See 245 Cal. App. 4th at 860. Although an “especially observant” website consumer might have noticed the terms, “that quality alone cannot be all that is required to establish the existence of an enforceable browsewrap agreement.” See 245 Cal. App. 4th at 865. “[T]o establish the enforceability of a browsewrap agreement, a textual notice should be required to advise consumers that continued use of a Web site will constitute the consumer’s agreement to be bound by the Web site’s terms of use.” 245 Cal. App. 4th at 867. “[A] conspicuous ‘terms of use’ hyperlink may not be enough to alert a reasonably prudent Internet consumer to click the hyperlink.” 245 Cal. App. 4th at 867.

 

Moreover, the consent need not require that the user has reviewed the terms of use, but only that the user had the opportunity to do so. For example, in Plazza, “the evidence establishe[d] that directly underneath the scroll box, users had to click on two buttons manifesting assent: a check box with the text ‘I agree to the terms and conditions of the updated Terms of Service [and other terms],’ and a red button right below it, with white text, reading ‘I Agree’ or ‘Agree.’” 2018 WL 583122 at *7. Under those facts, the court found “notice and a manifestation of assent.” See 2018 WL 583122 at *7. The evidence also showed that Airbnb sent e-mails to users about the modification of the terms of service, which e-mails were “yet another form of notice provided to Plaintiffs.” 2018 WL 583122 at *8. Under the facts of that case, the court found the arbitration provision in Airbnb’s terms of service enforceable.

 

Similarly, in Meyer v. Uber Technologies, 868 F.3d 66 (2d Cir. 2017), the plaintiff alleged he had not read the terms and conditions. The court nevertheless concluded that an agreement was reached. During the setup process to use the Uber mobile application, “[b]elow the input fields and buttons on the Payment Screen is black text advising users that ‘by creating an Uber account, you agree to the TERMS OF SERVICE & PRIVACY POLICY.’ … The capitalized phrase, which is bright blue and underlined, was a hyperlink that, when clicked, took the user to a third screen containing a button that, in turn, when clicked, would then display the current version of both Uber’s Terms of Service and Privacy Policy.” 868 F.3d at 71. The court concluded that “the design of the screen and language used render the notice provided reasonable as a matter of California law.” 868 F.3d at 78. The user’s assent—registering for the service—was unambiguous in light of the design. Of note for other mobile applications, the court wrote that “when considering the perspective of a reasonable smartphone user, we need not presume that the user has never before encountered an app or entered into a contract using a smartphone.” 868 F.3d at 77; see also Loewen v. Lyft, Inc., 129 F. Supp. 3d 945, 949 (N.D. Cal. Sept. 15, 2015) (citing evidence submitted supporting the date on which the specific plaintiff registered the account and the terms of service in effect on that date).

 

Finally, it is prudent to obtain consent to updates to your terms of service. See e.g. Pincaro v. Glassdoor, Inc., 2017 WL 4046317, fn. 11 (S.D.N.Y. Sept. 12, 2017).

 

Best Practices

Depending upon the specific application and context, companies should consider the following procedural changes:• Require affirmative consent to the terms of use with a click.

  1.  Use language manifesting affirmative consent, such as “Yes, I agree to the terms of use,” before the point of click.
  2.  Use a font that is legible on all relevant platform devices (i.e., font sizes must not be so small on a mobile device as to be illegible).
  3.  Require the click before the user can use the application.
  4.  Provide a hyperlink, accessible through the relevant mobile platform at the point of click, to the terms of use.
  5.  Track every click back to a verifiable account, so that if you ever need proof that a specific consumer consented, you have it.
  6.  Think very carefully before relying on a browsewrap.There is no question that clickwrap is more cumbersome to the consumer and more burdensome to the company. There are ways to alleviate these concerns, by working with counsel to draft the appropriate approval process for the application to minimize risk and maximize consumer satisfaction.