Terms of Use (also known as Terms of Service) play a pivotal role in digital business practices. These online agreements are intended to form a contractual relationship between a website or app and its user. Issues surrounding the enforceability of such agreements have been the subject of many legal articles, including this one written by my colleague. In addition to advising clients on enforceability, another question I am often asked is whether Terms of Use are always necessary, even for small, very basic public websites or apps (and if so, why).

Last week, the Massachusetts Supreme Judicial Court (SJC) issued a decision (Kauders v. Uber Technologies, Inc.) with serious implications regarding the enforceability of online agreements in the Commonwealth. This decision represents the first time the SJC has considered a substantive contract formation issue within the context of online agreements. By concluding that online contracts must meet the same standards of formation that exist for traditional contracts under MA law, the SJC’s decision will effectively require companies to reevaluate the way they present terms of service on website and mobile applications, if they wish for them to be enforceable in MA.

Online agreements, often referred to as “Terms of Use” or “Terms of Service,” have increasingly become standard practice for most companies doing business through a website. Although these agreements are designed to insulate companies from liability with respect to customers and users, not all online agreements are created equal. In fact, even the most detailed agreements can fail to protect companies from liability if the provisions are found to be unenforceable. A recently published white paper on the enforceability of online agreements actually found a direct correlation between form and enforceability[1].