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Daniel Barabander
@dbarabander
I am unaware of an area of law with more bang for its buck for crypto apps than a website’s terms of service. I know terms of service are not the most exciting thing in the world, but if done right, they can make a huge difference in legal liability exposure. The key issue apps run into in this area of law is whether the terms are enforceable on the app’s users. So, I looked into tips for increasing the likelihood of enforceability. Here’s a thread with the TLDR.
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Daniel Barabander
@dbarabander
Generally speaking, the “gold standard” for terms of service is a “clickwrap” or “scrollwrap” (I’m treating these as similar things, but different people call these different things). This is when the app presents the full terms, and users click a box saying they’ve read and agree to them. As one court put it: “To ensure that an online agreement passes muster, clickwrap is the safest choice.”
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Daniel Barabander
@dbarabander
But presenting your users with a wall of legalese is bad UI, so over time, apps have increasingly hyperlinked to the terms (instead of displaying the terms on the page itself) and included an action item to manifest assent, even if this is generally seen as riskier than a pure clickwrap. This is commonly referred to as a “sign-in wrap” or “hybrid wrap,” but I find that name confusing, so I call it a “hyperwrap.”
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Daniel Barabander
@dbarabander
Courts take an extraordinarily detailed and design-centric approach when assessing the enforceability of hyperwraps, focusing on whether they provide adequate notice to the user about the terms and whether the user’s action manifests assent. Based on my review of important cases, here are 5 tips to increase the likelihood that the hyperwrap is enforceable.
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Daniel Barabander
@dbarabander
First, present the hyperwrap on a clean, uncluttered page. The hyperwrap should be the star of the show when it’s presented, not buried.
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Daniel Barabander
@dbarabander
Second, the font providing notice of the terms should stand out. Small, faint text generally won’t cut it. Hyperlinks should look obviously clickable (see if you can convince your design team to let you use blue underlines for hyperlinks).
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Daniel Barabander
@dbarabander
Third, place the hyperwrap notice (“By clicking X button, you agree to the terms of service”) in close proximity to the action button where users manifest assent (the X button).
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Daniel Barabander
@dbarabander
Fourth, present your hyperwrap at critical stages like sign-in, sign-up, and time of purchase. This helps provide notice and reinforces the context of a continuing relationship, which courts look for in enforcing terms that contemplate as much.
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Daniel Barabander
@dbarabander
Finally, make the connection explicit: clicking the action button equals agreeing to the terms. Make the legal significance of the user’s action clear.
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Daniel Barabander
@dbarabander
None of the above is legal advice (as always), these tips are not a silver bullet to making an enforceable online contract, and this is an area of law in flux. You should discuss your situation with your legal counsel. Learn more in my piece: https://blog.variant.fund/enforceability-terms-of-service-ui.
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