As a business, you may need to make updates to your website’s terms of use (“TOU”) (also known as the “terms of service”). Quite often, the TOU gives you and your business the sole, unilateral power to modify the terms at any given time without giving anyone notice. For example, check out the TOU of the Canadian Broadcasting Corporation’s website. As of January 6, 2023, it states:
“These terms of use may be amended from time to time, so please come back to review them periodically.”
You may ask yourself whether you can just make those changes without notifying your website’s users.
Short answer is, in Canada, it depends on the terms of your TOU. Generally, if your TOU allows for modifying the TOU without providing notice to your website users, then you may make those changes. However, case law from the United States is quickly creating a new standard that may spread to Canada in the not so distant future. The new standard emerging requires notice to your website’s users, and the ideal notice method would be a mandatory click-through and scroll-through process that ensures the user went through the TOU again.
In this blog post, I’ll discuss: (1) how website users agree to a TOU; (2) common ways you may amend your TOU; and (3) the general legal landscape in Canada and the United States.
Is the Terms of Use a contract?
Yes. It’s a contract. Quite simply, in exchange for allowing the user to access your website and use its content, the user is agreeing to your rules. There are various methods that websites use to confirm a user’s agreement to the TOU, which include:
- click-wrap agreements, which require users to click a box verifying that they have read and understood the TOU;
- scroll-wrap agreements, which require users to scroll through the TOU before they can indicate their agreement to the TOU;
- browser-wrap agreements, where the TOU is posted on the website and users impliedly agree to it through their use of the website; and,
- sign-in-wrap agreements, which require users to review the TOU before they register for an account with the website.
Some websites may even use a combination of these various methods to indicate a user’s consent to the TOU.
How are Terms of Use typically updated?
The general practice for amending TOUs are to give notice via (1) email, (2) pop-up windows on the website, or (3) a statement on the website drawing attention to the amendments. Another common practice is to include in the TOU that users agree to any changes to the TOU without notice, and that continued use of the website after those changes constitute consent. The user is then told to check the TOU regularly for changes. The question that arises is: which practice is best for you?
What does Canadian case law say?
Unfortunately, Canada relies on old case law on whether the TOU was agreed upon and whether the amendments to the TOU were agreed upon by the website user.
As for whether a TOU was agreed to by the user, in 2011, the B.C. lower court decided Century 21 Canada Ltd. Partnership v. Rogers Communication Inc., 2011 B.C.S.C. 1196, in which the court held that where (1) the user had sufficient notice of the TOU, its terms, and purported effect, and (2) the user proceeded to access the website, then that was sufficient to communicate agreement with the TOU.
More recently, in 2017, a case involving Facebook was heard by the Supreme Court of Canada (Douez v. Facebook, 2017 S.C.C. 33). The plaintiff argued that a clause in Facebook’s TOU was unenforceable because she was “simply invited to give her consent to the clause by clicking on it” and her attention was not specifically drawn to the arbitration provision’s language. The Court did not agree, and Justice Abella stated that the common law, codified in some provincial statutes, confirmed that an enforceable contract may be formed by clicking an icon.
As for whether amendments to a TOU were agreed upon by website users, the “seminal” case was decided by the Ontario lower court in Kanitz v. Rogers Cable Inc., 2002 CanLII 49415 (O.N.S.C.), where the court agreed that Rogers’ amendment to add in an arbitration clause into its TOU was enforceable when (1) the TOU advised that Rogers could amend the TOU whenever by posting notice of such amendments on its website or by sending notice by e-mail or mail; and (2) Rogers notified website users that its TOU was updated through a statement on its website.
To summarize, the current best practice in Canada is to provide the user sufficient notice of the TOU (i.e., do not just add a link to the TOU at the bottom of your website and call it a day). Rather, sufficient notice could be attained by using a click-through banner when the user first accesses the website. In the future, the way in which you amend your TOU is constrained by the TOU’s terms. Your TOU could allow you to unilaterally modify the TOU without notice to the user. However, you should see a lawyer before modifying your TOU to ensure you follow its terms, especially if you’re adding in an important term, such as one that reduces your potential liability, changes the governing law, or even one that adds mandatory arbitration.
What’s going on in the United States?
In the U.S., the general rule is similar to Canada. The website user needs to have notice of the TOU and have the opportunity to read it. For example, the court in Hines v. Overstock.com, Inc., 668 F. Supp. 2d 362, 367 (E.D.N.Y 2009), found that the website needs to prompt the user to review the TOU and provide a prominently displayed link to the TOU so that the user may find and have the opportunity to review the TOU. Otherwise, the TOU may not be enforceable.
Recently, cases from the Ninth Circuit (which is a respected U.S. federal court of appeals for the U.S. west coast) have strengthened the rules on website hosts who wish to update their TOU. These developments generally began in June 2022, when the court in Sifuentes v. Dropbox Inc., 20-cv-07908-HSG (N.D. Cal. June 29, 2022), held that an email notification of an update to the TOU could not bind the plaintiff if the defendant could not prove that the plaintiff had actually read the email.
Following this, in Alkutkar v. Bumble, 22-cv-00422-PJH (N.D. Cal. Sept. 8, 2022), the plaintiff argued that he never accepted Bumble’s amendment to its TOU adding in an opt-out arbitration clause. However, the court disagreed, and pointed to the fact that, to use the app, the user must go through a mandatory click-through process to affirm their assent to the updated TOU.
Lastly, in Int’l Markets Live, Inc v. Thayer, 2:22-cv-00077-RFB-DJA (D. Nev. Sept. 16, 2022), the website holder had a click-wrap TOU that gave the website holder broad rights to unilaterally update the TOU. The website holder then updated the TOU three times over the course of three years by posting amendments to its TOU page. The District Court of Nevada found that this was insufficient notice to users and as such, the amendments to the TOU were unenforceable. Interestingly enough, this case dealt with two sophisticated businesses.
To summarize these developments, internet law is shifting: if a website holder wishes to amend its TOU, the best practice would likely be a click-through process that requires its website users to agree to the amendment in order to access the website.
What should I do?
As a business, you may not want to take the risk of unilaterally amending your TOU and hoping some crafty plaintiff doesn’t find a way to sue you. Reputationally, you also do not want future law students, lawyers, and academics to remember you as the one that changed Canadian internet law. Please see a lawyer for drafting your website’s TOUs and amending your TOUs.
If you have any questions related to this Article’s content, you may reach out to any lawyer in Siskinds’ Technology Team. You can also reach out to me, Savvas Daginis, a Cross-Border Business, Technology, and Privacy Lawyer, at [email protected] if you have any questions.
Special thanks to Zohra Bhimani, Articling Student, who helped research this article.