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'I have read and agree to the terms': The Web's biggest lie?

Jonas Van Remoortere/Getty Images/iStockphoto

Every time you install new software, whether it's an accounting package or the latest game, there's an end-user licence agreement (EULA) to contend with. Usually there's a button to click saying you accept it. Sometimes you're forced to scroll through the entire text before the button becomes active.

But who actually reads the darned things?

Everyone should, because the conditions in that EULA are a contract that's likely enforceable, says Michael Geist, a law professor and holder of the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa.

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Not having read the terms is no excuse.

The courts tend to "examine whether the user had reasonable notice of the terms and then whether the person manifested some affirmative agreement to the terms," adds Richard Santalesa, senior counsel for InfoLawGroup LLP based in Fairfield, Conn. "This doesn't mean, in many cases, that the user actually read the terms, but merely had the clear opportunity to do so."

So if you click "OK" – which you usually have to do to complete the installation – you're likely on the hook.

The issue is so widespread that an open source user initiative known as Terms of Service; Didn't Read has begun in Europe with the goal of rating EULAs and terms of service (ToS) so people can make an informed decision about their acceptability without having to wade through the legalese (it does not, however, claim to offer definitive legal advice, and does recommend actually reading the agreements). Instead, it presents high and low points in the ToS, based on peer-reviewed input from users.

The Terms of Service; Didn't Read website states: "'I have read and agree to the Terms' is the biggest lie on the Web. We aim to fix that. ToS;DR aims at creating a transparent and peer-reviewed process to rate and analyze Terms of Service and Privacy Policies in order to create a rating from Class A to Class E." It has already raised more than €20,000 ($25,700) to fund the project.

Meantime, what should you watch out for?

Toronto lawyer Jordan Nahmias, who specializes in media, intellectual property and corporate law, examines EULAs his clients are asked to sign and also drafts them for their products. He advises his clients to think about these factors:

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  • What can or can’t you use the product for? Can it be used to generate a profit? Is there a royalty or other fee payable for certain uses?
  • How is intellectual property treated under the EULA? Do you own your messages, for example, or does the EULA say you’re granting the rights to your words to the vendor? What about user-generated content?
  • Does the entity have a privacy policy? If so, how is information treated? What about third party information?
  • Are there limitations of liability? In particular, are there financial limitations on liability placed on the licensor?
  • How many licences are included in the EULA?
  • Is there a warranty, or is the service provided as is? What is excluded from warranty?
  • Are there dispute-resolution methods?
  • How do local laws affect the EULA? Some jurisdictions don’t permit vendors to absolve themselves of all liability, for example.

Courts have been willing to enforce EULAs, Dr. Geist notes. That puts the obligation on the individual. And there's a greater expectation that business people will read the agreements and be compliant, compared with ordinary consumers.

Adds Mr. Nahmias, "Small businesses should always be best prepared in the event that there will be a dispute or litigation. If there is an element of the EULA that one is not comfortable with [such as intellectual property ownership], then explore other options.

"And, if there are no options available, then be very sure about what one is getting into before hitting 'Accept' or 'I agree.'"

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