Mark Pestronk
Mark Pestronk

Q: I am an independent contractor with a large host agency. I have my own website that the host provides for me. On the website, my clients can book their own vacation or business travel if they wish. On my homepage, at the bottom, among other links, is one called "terms of use." The terms provide for things such as mandatory arbitration of disputes exclusively in the host's home city and permission to use the client's endorsements or pictures. Would these terms and conditions really be binding on my clients? If not, how do airlines and cruise lines get away with having similar terms and conditions?

A: The "terms of use" that you describe would almost certainly not be binding on your client. So, if the client sued you in court, the judge would probably decline to uphold any of the clauses you cited.

"Terms of use," "terms and conditions," "booking terms," "participant agreement" and "disclaimer" all mean "contract" or "agreement." They are the terms of the contract between you and your client.

The law of contracts requires that the parties agreed to the terms of the contract between them. So, if you are going to try to enforce the terms of your online contract, you need to show that the client agreed to them.

According to the most recent court precedents on these agreements, you need to show three things:

First, your terms must conspicuously state that they constitute a contract or agreement. If you merely call them "disclosures" or "policies," you can't expect a court to find that the client understood that he was going to be bound by a contract.

Second, you must get evidence that the client agreed to the terms. That's why all the major online travel agencies have an "I Agree" button a user is required to click before a sale becomes final. You need to ensure that the client cannot go further unless he or she hits the button.

Third, under the latest precedents, you have to display the terms in an easily scrollable fashion. For example, in the recent case of Sgouros v. Transunion, a federal court of appeals refused to uphold the terms that were displayed in a box that showed only three lines at a times and were very hard to scroll through and read.

I don't mean that the terms themselves must be easy for every client to understand. Clearly, legal terms like "exclusive forum" and the like would confuse many a layperson, but they certainly give judges no headache.

So it takes three steps to have a binding online contract: conspicuous notice that it is a contract, evidence of the client's agreement and easy scrollability.

Airlines get away with having none of these requirements because their contracts of carriage are overseen by the DOT, which has always taken the position that the contracts are automatically incorporated into every reservation, even if the passenger has no notice at all.

For international travel, the terms of treaties govern passengers' rights in addition to contracts of carriage.

For the consumer, the benefit of oversight from the DOT is that it has the power to prohibit unfair practices and occasionally exercises that power. For example, the DOT forbids a contract requirement that suits be brought only in the carrier's home state or country.

Cruise lines have no equivalent dispensation, so they must follow the three steps for online sales. Since I have never bought a cruise online from a cruise line, I don't know whether they follow them or risk having courts refuse to enforce their passenger contracts.

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