Are Your Website Terms and Conditions Ready for Black Friday?

Most businesses have a website. Many sell goods and services on their websites in e-commerce. Far fewer consider the impact of their website terms and conditions. Often the terms and privacy policies are an afterthought stuck on the page by a well-meaning -- but unknowledgeable -- web master.

What happens if your customer is injured by your product or service in a remote village at South Point, Big Island, Hawaii (the southernmost point of the United States)? Can your customer sue you there, and make you travel almost 5,000 miles to defend yourself just because she viewed your website there?

Courts have jurisdiction to decide a case when they have jurisdiction over the subject matter and the parties. Before a Hawaiian court has jurisdiction over a North Carolina business defendant, the defendant has to receive certain due process. The defendant must have “minimum contacts” with the forum, so that making the defendant defend a suit in that state “does not offend the traditional notions of fair play and substantial justice.” If there are no minimum contacts, the Hawaiian court must dismiss the suit.

In some cases, the defendant’s contacts with the state (sales, product delivery, bricks and mortar location) also provide the basis for the suit, and allow the defendant to be “haled” into a foreign jurisdiction. In other cases, a court will review the nature and totality of defendant’s interactions with the forum state (where the customer is located).

What types of Internet activity would subject a company to lawsuit across the country?

At one end of the spectrum are situations where a defendant clearly does business over the Internet. If the defendant enters into contracts with residents of a foreign jurisdiction that involve the knowing and repeated transmission of computer files over the Internet, personal jurisdiction is proper and the defendant company will have to defend a breach of contract or personal injury case in another state.

At the opposite end are situations where a defendant has simply posted information on a website that is accessible to users in foreign jurisdictions. A passive website that does little more than make information available to those who are interested in it is not ground for making a defendant company defend a lawsuit in another state.

The middle ground is occupied by interactive websites where a user can exchange information with the host computer. In these cases, the exercise of jurisdiction is determined by examining the level of interactivity and commercial nature of the exchange of information that occurs on the website.

The outcomes of these cases are highly fact-specific, depending on the claims alleged, the specific actions of the defendant, and the nature of the website, among many other factors. In North Carolina, the courts will analyze the business’s online activities, focusing on the intentionality and commercial nature of those activities directed at the forum state (where the customer is), to determine if exercising personal jurisdiction is consistent with due process principles.

The thought of having to defend a lawsuit in a far-flung corner of the country could keep a business owner up at night. But there are several concrete steps a company and its business attorneys can take to reduce the exposure.

What steps are you taking to protect yourself from risks coming from your website?