This past December, a Missouri Court of Appeals held that a user was bound by a website’s terms and conditions, even though she was not obligated to click to signify assent to those terms (Major v. ServiceMagic, Inc.).
The court noted that where a user is obligated to click to signify agreement to terms, such “clickwrap” agreements are routinely enforced. Where clicking is not required, a site’s “browsewrap“ agreement usually will be upheld if the user has actual or constructive knowledge of the terms and conditions before using the site.
On ServiceMagic’s site, next to each “Submit” button was a blue hyperlink to the site’s terms of use that stated “By submitting you agree to the Terms of Use”. The court held that the terms were sufficiently conspicuous to be enforced.
The court distinguished Specht v. Netscape Communications Corp. In that case, when Netscape allowed users to download certain software, a reference to license terms would have appeared only if the user scrolled further down the page. The U.S. Court of Appeals for the Second Circuit held that the terms would not be enforced because users (a) did not receive reasonable notice of the existence of the terms and (b) did not unambiguously assent to those terms. (Interesting side note: The opinion was written by then Circuit Judge, now Associate Justice of the Supreme Court, Sonia Sotomayor.)
Bottom line: If you want your site’s online terms to be enforced, requiring that the user click to denote acceptance is best, but providing notice of, and a link to, the terms can suffice.
Related post: Changing Online Terms of Use? Be Sure to Give Notice First!
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact an attorney directly.
On December 28, 2009, RockYou, a developer of applications for Facebook and other social networks, was sued in the U.S. District Court for the Northern District of California. The class action complaint alleges failure to encrypt users’ e-mail addresses and passwords and was filed shortly after a hacker copied that information for 32 million RockYou users.
RockYou’s potential exposure is huge. Among the various causes of action are:
The lesson for any company that stores users’ personally identifiable information: Make sure that information is encrypted!
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact an attorney directly.
I recently learned that one of my LinkedIn answers in Employment and Labor Law was selected as the Best Answer. The question and my answer are reproduced below.
Question: Which state law matters for employment contract questions (for the CEO of a firm), the law of the state of incorporation or the law of the state where the headquarters are located?
Answer: Please note that you actually have asked two different questions: (1) Which state’s law governs? (2) Where can / must the lawsuit be brought?
Answer to Q1: Most employment agreements will specify the applicable law. For agreements that do not, the court will need to make a “choice of law” decision. Assuming that the employee resides and works in the state where the company is headquartered, that state’s law probably will be chosen.
Answer to Q2: If the agreement has a mandatory jurisdiction and venue provision (stating where the suit *must* be filed), then that provision will apply – even if the law of a different state is to be applied. Otherwise, it is conceivable that multiple states could satisfy venue and jurisdiction requirements, though, again, the state where both parties are located would be most likely.
Getting to what may be the heart of your questions: In an employment-contract lawsuit, where the company is incorporated is not likely to matter.
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact an attorney directly.
I recently had a conversation with an attorney in Louisiana, who mentioned that in that state, the annual interest rate on a promissory note was limited to 12%. I told him that in California story is much different.
Article 15 (Usury) of the California Constitution states (simplifying a bit) that the annual interest rate on a loan or forbearance (refraining from requiring payment for a period of time) is limited as follows:
- If arising from money or goods supplied for personal, family or household purposes, the maximum interest rate is 10%.
- If arising from money or goods supplied other than for personal, family or household purposes, the maximum interest rate is the greater of (a) 10% or (b) 5% plus the rate charged by the Federal Reserve Bank of San Francisco on advances to its member banks.
- If the agreement between the parties does not specify an interest rate, it will be 7%.
Key point #1: The constitutional usury rate does not apply in situations other than loans and forbearances. So, for example, a promissory note executed in connection with the purchase and sale of a business, or late-payment terms in an agreement for the performance of professional services, may have whatever interest rate the parties may decide is appropriate.
Key point #2: In addition to the Constitutional requirements, there are quite a few situations where statutes prescribe maximum interest rates in specified circumstances, such as shared-appreciation loans, secured transactions, corporate securities, financial lenders, and government. So even in a business or professional context, there may be a restriction on the applicable interest rate.
Graphic credit: Microsoft Office Online
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact an attorney directly.
I recently ran across a situation where several members of a limited liability company wanted to get rid of a fellow member whose disruptive behavior was harming the LLC, but they did not know whether or how they could kick him out.
California Corporations Code Section 17100(c) says that an LLC operating agreement may provide for termination of a membership interest. Upon termination, the member is entitled to a return of the member’s capital contribution to the LLC.
Regrettably, the operating agreement in question did not address termination of memberships. As a result, the LLC was stuck with the trouble-maker.
The bottom line: At a minimum, an LLC operating agreement should include a provision for terminating memberships in the event of a serious breach, such as failure to make a required capital contribution.
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact an attorney directly.
