The words “terms of use”
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are too common among online consumers. Yet, most consumers shy away from the often lengthy, largely incomprehensible, time consuming online contracts, and simply check the “I agree” box before using online services, without realizing or caring about the fact that most of these agreements transfer all responsibility and liability to the user, while also selecting a jurisdiction clause that is advantageous to the website provider and inconvenient to most users. Thankfully for us consumers, these online terms, which can have serious consequences for the welfare of online users, are considered under the law as standard term contracts that are imposed on the consumer with very little to no choice in negotiating the terms. This is opposed to negotiated contracts where both parties are given an opportunity to provide their input regarding the terms of the agreement. As a consequence of the imposed nature of online terms of use agreements, the enforceability of all the terms within the agreement remains an open question.
Case in point, last month a Quebec court rejected eBay’s standard terms which require all disputes to be adjudicated in California. The case involved an auction gone bad with the Montreal-based sellers seeking to hold eBay responsible. Two students had acquired a rare pair of Nike shoes produced for the National Basketball Association 2012 All-Star game. The shoes were listed for auction on eBay and quickly garnered bids that exceeded U.S.$50,000. Before the auction was concluded, however, eBay stopped the auction (the reasons have yet to be disclosed in court).
The plaintiffs sued the online auction giant in a Quebec court, arguing that it could assert jurisdiction over the matter since the sellers were located in the province. eBay countered by noting that though its terms of use agreement states that all disputes are governed by Ontario and Canadian laws, any litigation must occur in California.The Quebec court was not impressed, noting that the eBay agreement was over six pages of dense text with “a large number of conditions and restrictions stacked on top of each other in language that is difficult to understand.” The jurisdiction clause was located at the bottom of page five, leading the court to conclude that for a user with very good eye sight and lots of patience and determination, they will find the provision stipulating California as the forum for disputes.More importantly, the court suggested that the choice of California appeared to be an attempt to dissuade potential litigants from proceeding with their action, noting that using Canadian law as the governing law but California courts as the jurisdiction for disputes was inserted to “prevent, deter, and void” any appeal against eBay.Given the court’s discomfort with the eBay agreement, it concluded that the California jurisdiction provision was “excessive and unreasonable” and therefore void. The decision allows the two students to continue their action against eBay in the Quebec courts.The ruling runs counter to earlier Canadian cases that have generally granted considerable deference to freedom of contract and the ability to enforce somewhat onerous jurisdiction clauses.
For example, one of the first e-commerce cases in Canada involved a lawsuit against Microsoft, which at the time was offering Internet access services. The lawsuit was launched in Ontario, but Microsoft’s electronic user agreement included a provision stipulating the State of Washington as the jurisdiction to settle disputes.
An Ontario court upheld both the contract and the provision, warning in a 1999 decision that failure to enforce electronic contracts would “lead to chaos in the marketplace, render ineffectual electronic commerce and undermine the integrity of any agreement entered into through this medium.”
Those concerns may have been valid when e-commerce was just getting started, but years later the Quebec decision suggests that e-commerce is also dependent upon fair contracts that grant a genuine ability to pursue legal action in the event of a dispute.
(By Frank LeSieur. This blog is published by Smit LeSieur, a business law firm that provides friendly legal advice in a variety of different areas, namely consumer protection law, class actions, Internet and e-commerce, privacy, data protection and cybersecurity, marketing and advertising, access to information, and more. Special rates apply for start-ups, green projects, digital media creators, and more. Visit our website at http://www.smitlesieur.com to learn more about us).