Are Your App T&Cs Enforceable?

 

24 April 2017
Posted by Suzy Wood

Most businesses realise that having a cracking set of terms and conditions is a critical part of setting up their app. But as Uber discovered last year, no app is immune from challenges when it comes to enforcing its T&Cs (or “EULA”: end user licence agreement). The lesson: by taking a few simple steps, you can put your business in the best possible position if you ever need to take action against a user.

Get the content right, understand relevant laws and don’t cut and paste

Of course, getting your content right is the first step. If you want to ensure your EULA is enforceable, it’s important to make sure it doesn’t run afoul of laws against penalties and unfair contract terms. Remember that many apps and digital service providers are operated overseas (commonly in the US), where the laws can be very different, so it’s best to seek legal advice from an Australian legal practitioner when drafting your EULA rather than doing a copy-paste from a competitor!

Then, follow our tips below to help you ensure you’ve properly sought agreement from your users. You might have the most tailored, professional EULA in the business, but all that effort will go to waste if it isn’t enforceable when it counts.

Keep it simple!

It’s instinct to want to bury the “scary” terms towards the end of your T&Cs, in the fine print. But actually, you’ll give yourself the best chance of being able to enforce these if you’re upfront and clear about them right from the start.

We recommend a simple dot-point summary of the critical terms right at the beginning of your document, drawing your users’ attention to the terms which limit their rights (such as where they grant you ownership of intellectual property they create, or indemnify you for certain loss).

Your document as a whole should be short, sharp and drafted in plain English.

Not only will this help to make the terms enforceable in the eyes of the law, but users will be more likely to adhere to them in the first place: after all, it would be hard to comply with a term they hadn’t read or understood!

Seek agreement from users

It’s not enough to hide your EULA somewhere in a “Legal” or “Terms and Conditions” link on your app.  You need to take steps to bring the terms to your users’ attention, and you need to seek some positive action from your users to indicate their agreement.

The simplest way to do this is to make your EULA “click-wrap”. A click-wrap agreement is an agreement which becomes binding upon a click of a button by the user indicating that the user agrees to certain terms.

When a user first signs up to your app, best practice is to present the EULA on a screen and require the user to scroll through the entire EULA before clicking the agreement button. The wording for your button can vary, but it should be along the lines of “I have read, and agree to be bound by, these terms and conditions”.

As an alternative to the common click-wrap agreement, we are increasingly seeing apps (particularly fitness apps) requiring their users to enter an on-screen signature. In our opinion, this goes even further towards securing enforceability because it reduces the opportunity for the user to argue that somebody else agreed on their behalf. Furthermore, signing requires a little more thought than simply clicking a button and is probably more likely to be taken seriously by a user.

Keep your users posted on changes

If you update your T&Cs, you need to notify your users of the changes. This will help ensure you can enforce the updated terms (not just the version they originally agreed to). Consider an email mail-out, pop-up window, or notice on the sign-in screen. (Just make sure your privacy policy covers the way you will be contacting your users!)

Is your business looking to draft, or update, its EULA? We’d love to assist! Contact us at hello@studiolegal.com.au.

DISCLAIMER

The information in this article is of a general nature. It does not constitute formal legal advice, and should not be relied on as such. Please see the full disclaimer in our website terms. Please contact Studio Legal if you are seeking advice about a specific legal matter.