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Attorney Zachary Strebeck looks at another fatal mistake that mobile developers and website owners make in their Terms of Service. This is one that could render any clause unenforceable due to an "illusory" promise.
Earlier this week, we looked at one potentially huge issue with how Terms of Service are presented to the user on a website or mobile app.
Today, we’re going to look at another problem, this time with the Terms of Service themselves, that could make a judge throw out the important clauses altogether.
In the last post, I mentioned the three things that make up a valid contract. One of these was something that lawyers call “consideration.”
Consideration is a legal term the means that the contracting parties have bargained for or exchanged value in the contract. Without consideration, the contract is called “illusory,” and is unenforceable. A court won’t hold it against the other party, even if they have “accepted” the contract.
Essentially, you’re making a promise without really promising anything or without the obligation to actually do anything. A good illustration of this would be saying “I will give you 10 dollars if I feel like it.” Well, it’s up to one of the contracting parties to “feel like it” and actually give up the money. There’s no real contract there.
It is a fairly common and notorious practice among website developers and startups to copy Terms of Service from other websites wholesale, and simply change the names and other important info. The reasoning is somewhat sound, I suppose; someone’s lawyer wrote it, so it’s probably good, right? Well, it’s also fairly common for Terms of Service to include a clause that goes something like this:
Blockbuster may at any time, and at its sole discretion, modify these Terms and Conditions of Use, including without limitation the Privacy Policy, with or without notice. Such modifications will be effective immediately upon posting. You agree to review these Terms and Conditions of Use periodically and your continued use of this Site following such modifications will indicate your acceptance of these modified Terms and Conditions of Use. If you do not agree to any modification of these Terms and Conditions of Use, you must immediately stop using this Site.
Do you see it? Blockbuster’s Terms of Use basically allowed them to change the terms of a contract that someone had agreed toat any time they wanted to anything they wanted. The court inHarris v. Blockbuster Inc. threw out a different clause in the contract forcing arbitration because of this.
If you have a Terms of Service on your site or mobile app, check it for a clause like this. Chances are good that there is something very much like this in there. And that could be a problem if you get sued.
For a checkup on your site or app’s Terms of Service and Privacy Policy, why not contact an attorney? Also, for a good overview of this and other legal issues facing game developers, sign up for my FREE eBook, “5 Legal Moves Every Game Developer Should Make.”
photo credit: JamesDPhotography and Steve Snodgrass via photopin cc
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