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How businesses should approach a hyperlink in contracts

With businesses more likely to use digital contracts, the potential for confusion has multiplied. Terms can now be hidden away in a hyperlink, and the signatory is expected to read all the terms linked to, even when these could be open to change or too general for certain parties.
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An increasingly common question from commercial clients of all sizes is, “have I agreed to terms that were only referred to by a hyperlink that I didn’t bother to click on? Surely I had to click on something to say I agreed like I do for online purchases!”

The answer is yes, potentially, and if you’re not careful you can be easily stuck with something you haven’t read. Like most legal questions though much will depend on the facts of each case.

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Why is this the case?

There is nothing new in the fact that you can be bound by terms you don’t read provided the party relying on them has taken reasonable steps to draw them to your attention. Ultimately, you ignore any reference to any applicable terms at your peril.

Whether any steps taken are reasonable has always been a fertile ground for debate but the decision in Impala Warehousing and Logistics (Shanghai) Co. Ltd v Wanxiang Resources (Singapore) PTE  may shorten that debate in cases involving websites and a hyperlink to terms.

One of the many issues in the case was whether Impala’s terms had been incorporated into a warehousing contract. The first page of Impala’s warehouse certificate said it was subject to Impala’s terms. A note at the base of certificate’s first page told the reader to refer to the reverse of the page for additional conditions. On turning the page the reader was told Impala’s terms and conditions were on its website and gave the address of Impala’s home page (rather than the actual page on which the terms could be found).

In Justice Teare’s view all this was sufficient to incorporate Impala’s terms which formed the basis of the contract in question. He said: “In this day and age when standard terms are frequently to be found on websites I consider that reference to the website is a sufficient incorporation of the warehousing terms to be found on the website.”

All very sensible and good news for sellers and suppliers looking for simpler ways to incorporate their terms. From a buyer’s perspective the decision is noteworthy not just because of that salutary quote, but also because the judge came to his conclusion notwithstanding the fact that when one visits Impala’s website and finds the terms page there are several sets on it and a buyer has thus has to choose which one applies to their transaction before they can consider them.

That suggests to me that in a B2B context a simple, live, hyperlink contained to one set of terms in an email or soft copy of a document that isn’t buried somewhere in tiny text is very likely to be effective and enforceable whether or not it’s clicked on.

What does this mean for suppliers and buyers?

For sellers and suppliers:

1) Consider putting your terms on a webpage (that could be “hidden” from the browsing public) and including a hyperlink to it on pre-contract documents and correspondence.

2) Don’t hide the hyperlink – it needs to be suitably prominent to be effective, particularly if your terms contain any unusual or onerous provisions.

3) Make sure your terms and conditions are up to date and that your staff know both what they mean as well as if/when and how they can be varied. Take advice if in doubt – reviewing terms doesn’t have to be an expensive or a major exercise and can save you from costly mistakes.

4) Exploit any IP tracing/recording functionality your website may have so you can prove someone has clicked through if needs be.

For buyers:

1) The old adage of “buyer beware” is alive and well.

2) Follow up any references to terms before you place an order – this is easier than asking for them to be sent if there’s a hyperlink!

3) Train staff to review terms and quickly refer-up any that cause them concern.

4) Look for “prevail” clauses that say that the seller’s terms will apply come what may. These are unlikely to be effective, particularly if you implement procedures to deal with them.

5) Take advice on response procedures if you don’t have any.

Simon Walsh is a senior associate in SA Law’s commercial dispute resolution team who advises businesses on trading terms.

Image: Shutterstock

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