Ethics of E-Commerce

Terms of Use can be a priceless tool in protecting e-commerce businesses from lighthearted lawsuits and crippling legal exposure. Internet contract law differs from jurisdiction to jurisdiction and changes over time, as more courts are called upon to interpret and enforce these agreements. In addition to terms and conditions addressing the specific website content at issue, most Terms of Use contain clauses addressing one or more of the following issues:

Choice of Law

This provision allows the parties to a contract to select, with certain limitations, which jurisdiction’s laws will be applicable to their relationship. Generally, a website’s Terms of Use apply the law of: (a) the jurisdiction whose laws are most positive to the publisher; (b) the jurisdiction in which the publisher is physically located; or (c) the jurisdiction whose laws are most familiar to the attorney who drafted the contract.

Limitation of Liability

This provision allows one or both parties to place certain limitations on their liability for breaching the agreement of the parties. Properly written, Limitation of Liability provisions can cap a party’s legal exposure for certain conduct.

Choice of Forum

This provision authorizes the parties to a contract to select, with certain limitations, the jurisdiction in which any disputes pertaining to their relationship are resolved. In many instances, a website’s Terms of Use purports to require any legal action pertaining to the website to be brought in the jurisdiction in which the publisher is located.

Attorneys’ Fees and Costs

In the US judicial system, a party is generally required to pay his or her own legal fee and expenses, win or lose. However, parties to a contract may, with certain limitations, require that a party who loses in a legal action brought pursuant to the agreement pay the attorneys’ fees and costs incurred by the prevailing party.

The failure to do so may result in Terms of Use that provide no protection to the e-commerce business or, worst yet, may create legal exposure where none previously existed.