Thursday, 28 May 2009

Website Terms and Conditions

I am often asked to draft website terms and conditions.  Here is how I set about the task.

Every website requires at least two sets of terms:

(1) website access terms; and
(2) a privacy statement.

If goods or services are to be acquired or supplied on-line the client will also require terms and conditions of procurement or supply. If access to certain parts of the site is restricted to registered users, the client will also need registration terms.   I refer to these collectively as "e-commerce terms".

Website Access Terms
A website is essentially a computer program that generates sounds and images on to a user's screen when processed by the user's browser. Like all programs the source code for a website is a
literary work pursuant to s. 3 (1) (b) of the Copyright, Designs and Patents Act 1988.   So long as it has not been copied slavishly from an antecedent website copyright subsists in the code pursuant to s.1 (1) (a).   In order to process the code, a browser has to reproduce it and reproduction of a copyright work is unlawful without the licence of the copyright owner. The owner can impose conditions for such licence and these conditions are my website access terms.

For a typical website I usually draft the following the following provisions:

(1) Licence Clause    This usually goes something like:
"(1) Access to this website requires the reproduction of copyright material which can be done lawfully only with the licence of ABC Ltd. a private company incorporated with limited liability in England and Wales under the provisions of the Companies Acts 1985 – 2006 having its registered office at Wuthering Heights, Haworth, West Yorkshire BD99 0AZ ("ABC").
(2) ABC grants such licence only on the following terms.
(3) If you do not accept these terms you may not visit this site and must leave immediately".
(2) Acknowledgement:   Visitors are asked to acknowledge such things as
  • the site is only an information resource and does not contain professional advice;
  • any and all intellectual property belongs to the site owner; and
  • they are subject to the jurisdiction of the English courts.
(3) Intellectual Property: Visitors are required to promise not to download copy or make use of that material otherwise than for their personal and private use without the owner's prior written consent.

(4) Disclaimers: I usually disclaim liability for consequential damages and economic loss and third parties' acts or omissions.

(5) Variations: I reserve the right to amend these terms upon reasonable notice.

(6) Severance: Should any of these terms be void or unenforceable they are deemed to have never formed part of this agreement but the remaining terms continue to have full force and effect.

(7) Forbearance: Forbearance in enforcing a term on one occasion shall not affect the right to enforce it in future.

(8) Choice of Law: Disputes and differences are to be determined in accordance with English law.

Privacy Statement
Collection and use of personal data are regulated in the UK by the Data Protection Act 1998 and similar legislation in many other countries.  Such legislation is broadly consistent with Guidelines on Transborder Data Flow that have been adopted by the Organization for Economic Co-operation and Development.   To facilitate compliance with those guidelines the OECD has developed a very useful Privacy Statement Generator.

A privacy statement covers such things as:
  • who owns and controls the website
  • the purpose of the website
  • the data that are to be collected
  • the use to which such data will be put
  • whether cookies are to be collected 
  • whether it is necessary to register as a user, and
  • whether the data holder has notified his use of personal data under the Data Protection Act 1998.
There should also be a statement that the privacy statement is to be read with the website access terms.

E-Commerce Terms
Unless the site owner is prepared to litigate anywhere in the world (including especially the USA) and has sufficient insurance or other resources in place to do so,  there should be a clear statement that the owner will do business through the site only with residents of the UK.   In International Shoe Co v Washington 326 US 310 the US Supreme Court established the principle that he who enjoys the protection of a state in order to carry on business there has to accept the burdens of being present in that state such as accepting the jurisdiction of its courts.   What constitutes presence has been discussed in many subsequent cases but a distinction appears to have been drawn between "active" websites which solicit and transact business within a state and "passive" sites which merely supply information. If a site owner does intend to do business outside the UK he or she is urged to have separate sites for each country and to take comprehensive legal advice from a lawyer practising in the jurisdiction concerned before doing so.

It is important to remember what terms and conditions can and cannot do. They cannot be used to disclaim or exclude all liability.   The Unfair Contract Terms Act 1977 disallows the exclusion or limitation of liability for death or personal injury by means of a disclaimer or contract term and permits such the exclusion or limitation of liability for other kinds of loss only in so far as the term meets the requirements of reasonableness. I often liken exclusion clauses to the keep of a medieval castle.   Best practice is the curtain wall or moat which keeps most intruders away.   Insurance provides the second defence for the occasional slip up or bad luck.   And terms and conditions manage risks that cannot be insured against. 

Because terms and conditions have to mesh with best practice and the available insurance cover which differ from industry to industry and client to client it would be unhelpful to offer here an all purposes precedent.   Each set of terms has to be crafted individually for the client and that takes me time and costs the client some money - but it is nearly always money well spent. All that I will say is that my terms make clear:
  • when a contract is made and on what terms
  • when it is performed
  • when payment is due
  • the precise consequences of non-payment
  • the terms upon which a contract can be terminated
  • the precise consequences of termination
  • how notice is to be served and notification given
  • how disputes are to be resolved, and
  • which law is to apply.
In addition to the Unfair Terms in Consumer Contracts Regulations 1999, The Consumer Protection from Unfair Trading Regulations 2008  and other consumer protection legislation websites have to take account of The Consumer Protection (Distance Selling) Regulations 2000 (as amended) which are known as "the distance selling regulations" and The Electronic (EC Directive) Regulations 2002 or "e-commerce regulations".   The distance selling regulations require suppliers to provide customers with their terms and conditions in writing, written confirmation of their orders, full information on cancellation and complaints and delivery of the goods within 30 days.   The e-commerce regulations require the supplier's name, address and contact details, his or her VAT number, professional body and other information to appear on the website.

How Much?
It should be abundantly clear that this task requires a lot of thought and work and that effective terms and conditions cannot be cobbled together from a precedent book.   I negotiate an hourly rate for each job with a rough estimate of timescale.   My hourly rate may a bit higher than some draftsmen and women outside London but then I have been doing this sort of work for so long that I can work very quickly.   There is usually a lot of change from £1,000 for all the sets of terms and conditions that the average client needs.