Terms of Use
Authors: Lemley Mark 
Published: July 2018

Electronic contracting has experienced a sea change in the last decade. Tenyears ago, courts required affirmative evidence of agreement to form acontract. No court had enforced a shrinkwrap license, much less treated aunilateral statement of preferences as a binding agreement. Today, bycontrast, it seems widely (though not universally) accepted that if youwrite a document and call it a contract, courts will enforce it as acontract even if no one agrees to it. Every court to consider the issue hasfound clickwrap licenses, in which a user clicks I agree to standard formterms, enforceable. A majority of courts in the last ten years haveenforced shrinkwrap licenses, on the theory that people agree to the termsby using the software they have already purchased. Finally, and morerecently, an increasing number of courts have enforced browsewrap licenses,in which the user does not see the contract at all but in which the licenseterms provide that using a Web site constitutes agreement to a contractwhether the user knows it or not. Collectively, we can call theseagreements terms of use because they control (or purport to control) thecircumstances under which buyers of software or visitors to a public Website can make use of that software or site.The rise of terms of use has drawn a great deal of attention because of themass-market nature of the resulting agreements. Terms of use are draftedwith consumers or other small end users in mind. Commentators - myselfamong them - have focused on the impact of this new form of contract onconsumers. But in the long run they may have their most significant impactnot on consumers but on businesses. The law has paid some attention to theimpact of terms of use on consumers. Virtually all of the cases that haverefused to enforce a browsewrap license have done so in order to protectconsumers; conversely, virtually all the cases that have enforcedbrowsewrap licenses have done so against a commercial entity. Andshrinkwrap and clickwrap cases, while enforcing some contracts againstconsumers, have protected those consumers against certain clausesconsidered unreasonable. Businesses, however, are presumed to know whatthey are doing when they access another company's Web site, so courts aremore likely to bind them to that site's terms of use. Sophisticatedeconomic entities are unlikely to persuade a court that a term isunconscionable. And because employees are agents whose acts bind thecorporation, the proliferation of terms of use means that a large companyis likely agreeing to dozens or even hundreds of different contracts everyday, merely by using the Internet. And because no one ever reads thoseterms of use, those multiple contracts are likely to have a variety ofdifferent terms that create obligations inconsistent with each other andwith the company's own terms of use.We have faced a situation like this before, decades ago. Asbusiness-to-business commerce became more common in the middle of the 20thCentury, companies began putting standard contract terms on the back oftheir purchase orders and shipment invoices. When each side to a contractused such a form, courts had to confront the question of whose formcontrolled. After unsuccessful judicial experimentation with a variety ofrules, the Uniform Commercial Code resolved this battle of the forms byadopting a compromise under which if the terms conflicted, neither party'sterms became part of the contract unless the party demonstrated itswillingness to forego the deal over it. Rather, the default rules ofcontract law applied where the parties' standard forms disagreed, but whereneither party in fact insisted on those terms.I have three goals in this paper. First, I explain how courts came toenforce browsewrap licenses, at least in some cases. Second, I suggest thatif browsewraps are to be enforceable at all, enforcement should be limitedto the context in which it has so far occurred - against sophisticatedcommercial entities who are repeat players. Finally, I argue that even inthat context the enforcement of browsewraps creates problems for commonpractice that need to be solved. Business-to-business (b2b) terms of useare the modern equivalent of the battle of the forms. We need a parallelsolution to this battle of the terms. In Part I, I describe the developmentof the law to the point where assent is no longer even a nominal element ofa contract. In Part II, I explain how the recent decisions concerningbrowsewrap licenses likely bind businesses but not consumers, and theproblems that will create for commercial litigation. Finally, in Part III,I discuss possible ways to solve this coming problem and some broaderimplications the problem may have for browsewrap licenses generally.