Wouldn't it be nice if there were a law against abusive sneakwrap terms? Well, it turns out, there is. Unfortunately for those of us on this side of the Atlantic though, it's the law of the European Union.
This came to my attention recently when a reader sent me an e-mail that customers of AOL France received in the summer. AOL France's message announced a number of changes to its subscriber agreement, but not changes it was making voluntarily. Having lost a lawsuit brought by consumer organization called UFC, AOL France was removing 31 clauses from its agreement that a French court had ruled abusive.
Almost all the clauses deemed abusive by the court are ones that you'd find in virtually any American ISP's terms of service. The offending terms included AOL's disclaimer of all liability for service outages, the customer's automatic acceptance of billing changes, AOL's right to terminate the service without warning, and the practice of charging a full minute of service for partial minutes. Also included was that most classic of sneakwrap terms, the right of AOL to unilaterally make changes to the agreement at its discretion.
Of particular importance among the 31 clauses was also the one where AOL says the customer's sole remedy in any dispute is to stop using the service. I note that because, in several lawsuits brought by customer here in the U.S., AOL has argued for dismissal based on that same remedy limitation. In fact, in one case which AOL ultimately settled, the company's lawyers were almost successful in getting the remedy term enforced even though the alleged harm AOL's software had caused would have occurred before the customer could see the license agreement.
The same terms that U.S. courts take seriously struck the French court as completely unfair to customers. And it appears there's a very good chance that courts in other EU nations might take the same approach. A brief issued by the law firm Morrison & Foerster about the AOL France case warns other U.S. companies doing business in Europe not to expect American-style terms to be enforceable.
The French court decision was based in large part on consumer contract law that is EU-wide. "The underlying premise of the 1993 Directive on Unfair Terms in Consumer Contracts is that the consumer's commercial position is inherently weaker than the seller's, as regards both the consumer's bargaining power and his level of knowledge of the product," says the Morrison & Foerster report. "The Directive provides that a contractual provision will be 'unfair' (and unenforceable) if: (a) it was not individually negotiated between the parties and (b) it causes a 'significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer.' ... In UFC v AOL France, several clauses were struck down because they: (a) were arbitrary and blatantly unfavorable to the consumer, (b) were insufficiently precise -- this lack of precision being favorable to AOL, (c) allowed AOL to unilaterally modify the service to be provided under the contract, or (d) constituted unjust enrichment ..."
Gee, a law that says companies can't abuse consumers with unfair terms - what kind of idea is that? Well, considering we live in a land whose nation's capital is surrounded by two states that have enacted UCITA, I think there's unfortunately only one word for the idea of an anti-sneakwrap law: unAmerican.
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