Tag: contracts

April 5, 2020 Contracts

Influencer agreements: what needs to be in them

If you are a social media influencer, or are a brand looking to engage an influencer, you may need to enter into an influencer agreement. Here are five key things that should be in the contract between the influencer and the brand: 

  • Obligations 
  • Payment 
  • Content ownership 
  • Publicity rights 
  • Endorsement guidelines compliance 

Obligations under the influencer agreement.

The main thing that a brand wants from an influencer is for the influencer to say certain things about the brand’s products, in a certain way, and at certain times. What kind of content? Photos? Video? Which platforms? What hashtags? When? How many posts? The agreement should spell all these things out.

Payment.

Influencers are compensated in a number of ways. In addition to getting free products, they may be paid a flat fee upfront or from time to time. And it’s also common too see a revenue share arrangement. That is, the influencer will get a certain percentage based on sales of the products she is endorsing. These may be tracked by a promo code. The contract should identify all these amounts and percentages, and the timing for payment.

So what about content ownership? 

The main work of an influencer is to generate content. This could be pictures posted to Instagram, tweets, or video posted to her story. All that content is covered by copyright. Unless the contract says otherwise, the influencer will own the copyright. If the brand wants to do more with that content outside of social media, that needs to be addressed in the influencer agreement.

And then there are rights of publicity. 

Individuals have the right to determine how their image and name are used for commercial purposes. If the brand is going to feature the influencer on the brand’s own platform, then there needs to be language that specifies the limits on that use. That’s key to an influencer who wants to control her personal brand and reputation. 

Finally, endorsement guidelines and the influencer agreement. 

The federal government wants to make sure the consuming public gets clear information about products. So there are guidelines that influencers have to follow. You have to know what these guidelines are to stay out of trouble. And the contract should address what happens if these guidelines aren’t followed.

See also: When is it okay to use social media to make fun of people?

About the author: Evan Brown is an attorney helping individuals and businesses with a wide variety of agreements involving social media, intellectual property and technology. Call him at (630) 362-7237 or send email to ebrown@internetcases.com. 

March 25, 2020 Contracts

Technology vendors must be proactive in dealing with COVID-19 problems

Early action now on possible performance issues will “flatten the curve” of customer problems in the coming weeks and months. 

Here are three things technology and software vendors can do right now to get ahead of problems that may appear (if they are not already) with services such as development, implementation and support:

  • Check your contracts to see whether there are any “material assumptions” that have failed or will fail – perhaps because of some governmental action or unavailability of personnel.
  • Consider whether a change order would be appropriate to redefine the scope of services, timing for performance, or the fees to be charged.
  • See if any delay in your performance is excused on the basis of force majeure. If so, do you need to give notice to your customer that you are claiming force majeure?

Learn from IBM: Do what is required when there are failures of material assumptions.

In 2006, the State of Indiana signed a $1.3 billion contract with IBM to revamp the technology of the State’s welfare system. The economy went south in 2008. In the complicated breach of contract litigation that followed, IBM argued, among other things, that the economic downturn resulted in the failure of one of the material assumptions of the agreement. IBM urged the court to consider that failure of assumption when deciding whether IBM had materially breached its contract to develop and deploy the system.

The Indiana supreme court rejected IBM’s arguments. Why? Not because the economic downturn was not a failure of a material assumption. (It might have been.) Indeed, the contract specifically said that one of the parties’ material assumptions was that the economy would not take a downturn. But IBM did not do what the contract required in light of the downturn – it did not submit a change order request in response to the failure of the assumption, as the contract required.

Change orders anyway?

Even if your contract does not contain material assumptions, it may contain a procedure for procuring change orders. Parties include change order provisions so that they have an organized pathway for making changes to the scope, timing or pricing when circumstances – whether dramatic or trivial – change while the contract is being performed. Vendors should consider whether a simple change to the parties’ obligations can be made now to reduce bigger problems later. It is better for a ship to correct its course early in the journey rather than after many weary days at sea.

And from a practical, customer-focused perspective, the discussions around possible change orders gives a vendor the opportunity to communicate with its customer. This gives the vendor the chance to assure the customer that services are safe in the long run, and can work to build trust and goodwill that will be key in the further development and collaboration that is going to happen in the technology space once this COVID-19 episode has come to a close. 

Force majeure notice – it is critically important

In the litigation against the state of Indiana, IBM also claimed that severe flooding in the state in 2008 was a force majeure event that excused IBM’s performance. Again, as with the argument for failure of material assumption, IBM did not do what it was required to do under the terms of the contract to avail itself of this excuse in performance.

The court found that force majeure did not apply because IBM did not give appropriate notice as required under the agreement. This highlights a critical takeaway – if a vendor sees an upcoming need to claim that it cannot perform due to some circumstance arising from causes outside its control, it is better to place the customer on notice of that fact sooner rather than later.   

So, here are the key questions to ask right now:

  • Has a material assumption failed? If so, what must I do?
  • Would a request for change order be appropriate?
  • What do I need to do before claiming force majeure?

Being proactive now, in the early stages of the COVID-19 crisis, will – just as in the epidemiological context – flatten the curve of problems later.

State of Indiana v. IBM Corp., 51 N.E.3d 150 (Ind. 2016)

October 17, 2019 Contracts

Browsewrap enforceable: hyperlinked terms on defendant’s website gave reasonable notice

Plaintiff was bound by forum selection clause found in online terms and conditions. 

Plaintiff sued TripAdvisor and some related defendants (including Viator, a company that TripAdvisor acquired) for a number of torts arising from an ATV accident that plaintiff had while on a tour in Mexico that she had booked online through defendants’ website. Defendants moved to dismiss, or in the alternative, to transfer the matter to federal court in Massachusetts based on the forum selection clause found in the Terms and Conditions that plaintiff agreed to when she booked the tour. The court granted the motion to transfer. 

To purchase the tour, plaintiff was required to click on a “Book Now” icon, directly under which the following message was located: “[b]y clicking Book Now and making a reservation, I acknowledge that I have read and agree to be bound by Viator’s Terms and Conditions and Privacy Statement.” The phrase “Viator’s Terms and Conditions” appeared in blue underlined text, in the form of a hyperlink, which directed the consumer to the website’s Terms and Conditions.

Viator’s Terms and Conditions included a forum selection clause, which, in relevant part, provided:

[T]his agreement is governed by the laws of the Commonwealth of Massachusetts, USA. You hereby consent to the exclusive jurisdiction and venue of courts in Boston, Massachusetts, USA and stipulate to the fairness and convenience of proceedings in such courts for all disputes arising out of or relating to the use of this Website. You agree that all claims you may have against Viator, Inc. arising from or relating to this Website must be heard and resolved in a court of competent subject matter jurisdiction located in Boston, Massachusetts.

The court found that plaintiff had agreed to the forum selection clause, and that the clause was enforceable. In determining whether plaintiff was bound by the clause, the court was guided by “fundamental precepts of contract law.” More specifically, under New Jersey law, “[a] contract term is generally binding if the contract has been mutually agreed upon by the parties, is supported by valid consideration, and does not violate codified standards or offend public policy.” W. Caldwell v. Caldwell, 26 N.J. 9, 24-26 (1958).

Plaintiff had argued that the Terms and Conditions amounted to an invalid browsewrap agreement, because she neither received reasonable notice of their existence, nor provided an unambiguous manifestation of assent. Primarily relying upon Specht v. Netscape, plaintiff argued that she was not bound by the Terms and Conditions, because Viator’s website was designed so that a user can use its services without affirmatively assenting to the web page’s terms of use. According to plaintiff, she was ultimately permitted to purchase the ATV tour without ever being asked to check a box or click an “I Agree” button, or even acknowledge that the Terms existed. Without proper notice, plaintiff maintained that enforcing the forum selection was not appropriate. 

The court disagreed. It found that the hyperlinked terms on defendant’s website adhered to the requirements of reasonable notice. Regardless of whether plaintiff was required to scroll through the Check Out page, the hyperlinked Terms and Conditions were conspicuously placed directly underneath the “Book Now” icon. Based on its location, therefore, the court found that the hyperlink was not hidden in an area of the screen that plaintiff was unlikely to notice, but, instead, was clearly displayed in a section of the webpage that she needed to review in order to effectuate her purchase of the ATV tour. Stated differently, the hyperlink was placed within the immediate proximity of an icon that plaintiff was required to click, for the purpose of confirming her purchase on defendant’s website. 

Mucciariello v. Viator, Inc., No. 18-14444, 2019 WL 4727896, D.N.J. (September 27, 2019)

About the Author: Evan Brown is a Chicago technology and intellectual property attorney. Call Evan at (630) 362-7237, send email to ebrown [at] internetcases.com, or follow him on Twitter @internetcases. Read Evan’s other blog, UDRP Tracker, for information about domain name disputes.

February 16, 2017 Contracts

Florida court rules that online seller’s terms and conditions were not enforceable

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Beware the browsewrap.

A Florida state appellate court recently held that an online seller’s terms and conditions, appearing in a “browsewrap” agreement linked-to from the bottom of its web pages, were not enforceable.

Plaintiff, an online purchaser of defendant’s dietary supplements, sued defendant seller over liver damage plaintiff allegedly sustained from the products. Defendant filed a motion with the trial court seeking to enforce an arbitration clause in its online terms and conditions. Plaintiff objected to that motion, arguing that he never agreed to the arbitration clause contained in the browsewrap agreement.

The lower court denied defendant’s motion to compel arbitration, finding that the terms of the browsewrap agreement were not incorporated into the sales agreement. Defendant sought review with the Florida appellate court. On appeal, the court affirmed the denial of the motion to compel.

This was a case of first impression in the Florida state courts.

The court observed that in other jurisdictions, browsewrap agreements have generally been enforced only when the hyperlink to the terms and conditions is conspicuous enough on the web page to place a user on inquiry notice of their terms. (Inquiry notice, simply stated, is, as its name suggests, notice sufficient to make the user aware enough of the terms that their natural inclination is to inquire further as to what the particular terms are.)

The court distinguished this case from the case of Hubbert v. Dell Corp., an Illinois case in which the court found a browse-wrap agreement to be enforceable.

Here, unlike in the Hubbert case, the defendant’s website allowed a purchaser to select a product and proceed to checkout without seeing the hyperlink to the terms and conditions. The website user could complete the purchase without scrolling to the bottom of the page where the link to the terms and conditions appeared.

In this situation the court found that the online seller’s website failed to advise the plaintiff that his purchase was subject to the terms and conditions of the sale, and did not put him on the required inquiry notice of the arbitration provision.

Vitacost.com, Inc. v. McCants, — So.3d — 2017 WL 608531 (Fla.Ct.App. Feb. 15, 2017)

Evan_BrownAbout the Author: Evan Brown is a Chicago technology and intellectual property attorney. Call Evan at (630) 362-7237, send email to ebrown [at] internetcases.com, or follow him on Twitter @internetcases. Read Evan’s other blog, UDRP Tracker, for information about domain name disputes.

March 19, 2016 Contracts

Court holds browsewrap agreement not enforceable

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Plaintiff filed a consumer fraud class action lawsuit against defendant, the operator of an ecommerce website. Defendant moved to have the case heard by arbitration, arguing that the arbitration provision in its website’s terms of use required the dispute to be arbitrated instead of heard in court. The terms of use were in the form of a “browsewrap” agreement — viewable by a hyperlink displayed at the bottom of each page of defendant’s website.

The court denied the motion, finding that the hyperlink to the terms of use (containing the arbitration provision) was too inconspicuous to put a reasonably prudent internet consumer on inquiry notice. Since the agreement was not enforceable, plaintiffs were not bound by the arbitration provision. Defendant sought review with the California Court of Appeal. On appeal, the court affirmed the lower court.

It observed that for a browsewrap agreement to be enforceable, a court must infer that the end user assented to its terms. This may be more difficult to show than in situations involving “clickwrap” agreements, which require the user to affirmatively do something, such as check a box, to indicate his or her assent to the terms of use.

In this case, the court held that although an especially observant internet consumer could spot the defendant’s terms of use hyperlinks on some checkout flow pages without scrolling, that quality alone was not all that was required to establish the existence of an enforceable browsewrap agreement. Rather, as the Second Circuit observed in Specht v. Netscape, 306 F.3d 17 (2d Cir.2002), “[r]easonably conspicuous notice of the existence of contract terms and unambiguous manifestation of assent to those terms by consumers are essential if electronic bargaining is to have integrity and credibility.”

Here, the defendant’s terms of use hyperlinks — their placement, color, size and other qualities relative to defendant’s website’s overall design — were simply too inconspicuous to meet that standard.

Long v. Provide Commerce, Inc., — Cal.Rptr.3d —, 2016 WL 1056555 (Cal Ct. App., March 17, 2016)

About the Author: Evan Brown is a Chicago attorney advising enterprises on important aspects of technology law, including software development, technology and content licensing, and general privacy issues.

Photo courtesy Flickr user Patrick Finnegan under this Creative Commons license.

August 17, 2015 Contracts

Court provides guidance on how to effectively communicate online terms of service

Are online terms of service provided via hyperlink in an email binding on the recipient of that email? The Second Circuit recently addressed that question, and the decision gives guidance on best practices for online providers.

Plaintiff booked a trip to the Galapagos Islands using defendant’s website. When she purchased her ticket, she got a booking information email, a confirmation invoice and a service voucher. (It is not clear how plaintiff got the confirmation invoice and the service voucher – the court’s opinion says they were sent as emails, but the PACER record does not show them as emails. In any event, plaintiff did not dispute that she received all three documents, nor did she dispute all three documents contained a hyperlink to defendant’s “terms and conditions” which were available online.)

One evening during the trip, a tour guide allegedly assaulted plaintiff. She sued defendant for negligently hiring and training that tour guide. Defendant moved to dismiss, pointing to language in the online terms and conditions that called for disputes to be heard in Canadian court. The district court dismissed the action, and plaintiff sought review with the Second Circuit. On appeal, the court affirmed. It held that defendant had reasonably communicated the forum selection clause to plaintiff by using hyperlinks and the appropriate language in the terms and conditions.

Each of the documents contained an underlined hyperlink, and accompanying language advising plaintiff to click on the hyperlink. The booking information email contained a standalone provision with the heading “TERMS AND CONDITIONS”. This section stated that “[a]ll . . . passengers must read, understand and agree to the following terms and conditions.” The hyperlink immediately followed. Both the confirmation invoice and the voucher contained a link to the terms and conditions, preceded by “[c]onfirmation of your reservation means that you have already read, agreed to and understood the terms and conditions. . . .”

The actual structure and language of the terms and conditions also served to reasonably communicate the forum selection clause. The second paragraph stated that the terms and conditions “affect your rights and designate the governing law and forum for the resolution of any and all disputes.” Later in the terms and conditions, a standalone section titled “APPLICABLE LAW” provided that all matters arising from the agreement were subject to Ontario and Canadian law and the exclusive jurisdiction of the Ontario and Canadian courts.

The decision validates the notion that an e-commerce provider can rely on establishing valid and binding contracts with its customers without having to actually transmit a copy of the terms and conditions that would apply to the transaction. Though the facts of this case dealt with email, there is no substantive reason why the best practices revealed by the court’s decision would not apply to providers of mobile apps and other online platforms.

Starkey v. G Adventures, Inc., — F.3d —, 2015 WL 4664237 (2nd Cir. August 7, 2015)

Evan Brown is an attorney in Chicago helping clients manage issues involving technology and new media.

December 29, 2014 Contracts

Forum selection clause in browsewrap agreement did not bind parties in bitcoin fraud case

We all know that clickwrap agreements are preferable to browsewrap agreements, assuming, of course, the objective is to establish binding contracts between participants in online transactions. Nonetheless, some online platforms still (try to) rely on browsewrap agreements to establish terms of service. That avoidance of best practices gives us situations like the recent case of Hussein v. Coinabul, LLC, in which a federal court in Illinois refused to enforce a forum selection clause in a “bitcoin to gold marketplace” browsewrap agreement.

Plaintiff alleged that he sent about $175,000 worth of bitcoins to defendants in June 2013, expecting to get gold in return. (Plaintiff alleges he transferred 1,644.54 BTC. The average exchange value in June 2013 was $107.82/BTC. You can get historical bitcoin price data here: http://www.coindesk.com/price) When the gold never arrived, plaintiff sued for fraud.

Defendants moved to dismiss, citing a forum selection clause contained in a browsewrap agreement found on its website. That purported agreement required all disputes to be heard in the state courts of Wyoming, and for Wyoming law to apply. The court denied the motion to dismiss, finding that the browsewrap agreement afforded plaintiff neither actual nor constructive knowledge of its terms and conditions.

The court observed that the hyperlink that directed users to defendants’ Terms of Service was listed among ten other hyperlinks at the bottom of each page. (See this Wayback Machine capture of the website from June 2013).

As for lack of actual knowledge, the court credited plaintiff’s allegations that he did not review or even know of defendants’ Terms of Service when he entered the bitcoin transaction. And there was no evidence to the contrary in the record.

And as for lack of constructive knowledge, the court found that the hyperlink, “buried at the bottom of the webpage – [was] without some additional act of notification, insufficient for the purpose of providing reasonable notice.”

Hussein v. Coinabul, LLC, No. 14-5735, 2014 WL 7261240 (N.D. Ill. December 19, 2014)

May 7, 2014 Contracts

Limitation of liability clause in software license agreement did not excuse customer from paying fees

Customer did not like how software it had bought performed, so it stopped paying. Vendor sued for breach of contract, and customer argued that the agreement capped its liability at $5,000. Both parties moved for summary judgment on what the following language from the agreement meant:

NOTWITHSTANDING ANYTHING TO THE CONTRARY, THE TOTAL DOLLAR LIABILITY OF EITHER PARTY UNDER THIS AGREEMENT OR OTHERWISE SHALL BE LIMITED TO U.S. $5,000.

Customer argued that the sentence meant what it said, namely, that customer would not be liable for anything over $5,000. But the court read otherwise, holding that construe the language as excusing customer’s payment of fees would render those provisions calling for fees (which were much more that $5,000) meaningless.

The court observed that when parties use the clause “notwithstanding anything to the contrary contained herein” in a paragraph of their contract, they contemplate the possibility that other parts of their contract may conflict with that paragraph, and they agree that the paragraph must be given effect regardless of any contrary provisions of the contract.

In this situation, the $5,000 limitation language was the last sentence of a much longer provision dealing with limitations of liability in the event the software failed to function properly. The court held that the rule about “notwithstanding anything to the contrary” applies if there is an irreconcilable difference between the paragraph in which that statement is contained and the rest of the agreement.

There was no such irreconcilable difference here. On the contrary, reading in such difference would have rendered the other extensive provisions dealing with payment of goods and services meaningless, which would have violated a key canon of construction.

IHR Sec., LLC v. Innovative Business Software, Inc., — S.W.3d —, 2014 WL 1057306 (Tex.App. El Paso March 19, 2014)

Evan Brown is an attorney in Chicago, advising clients on matters dealing with software licensing, technology, the internet and new media.

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