What is the point of website Terms and Conditions?

Question

I was considering answering How prominent must terms of service be?; when I was struck by a thought: what is the point of website Terms and Conditions anyway?

Clearly, if they form a contract and they are properly brought to the attention of and agreed to by the user then they are binding (knowledge of and agreement by the provider could safely be assumed). However, one of the fundamental requirements of a contract is that both parties must provide valuable consideration. If the user is paying to access the service then this requirement is satisfied (e.g., a pay wall on a news site or a purchase agreement on an auction site). If they are not then they provide no consideration and there is therefore no contract.

For example, participation on this website is putatively subject to the agreement you can read by following the legal link below. How prominent must terms of service be? is the appropriate place to address whether the terms are prominent enough to constitute agreement (IMO it's arguable), so take it that they are. It is possible, that what we post is valuable consideration but I think that is worth a question on its own so I did Are the Q&A posted on Stack Exchange websites valuable consideration?, so take it that it isn't. In the absence of its users providing valuable consideration then there is no contract: What then is the point of the terms and conditions?

Clearly, such terms and conditions could be to draw the users' attention to legal obligations that exist as a matter or law without a contract (e.g., Copyright and other IP obligations). They could also be used to create rules that would allow users to be denied service, however, since anyone can be denied service for any reason so long as that reason is not unlawfully discriminatory, it seems pretty pointless.

Answer 1

A web site's Terms of Service are not a contract but, rather, a license. law.washington.edu has an interesting discussion of contracts vs. licenses and asks the question, "Does it matter?"

In the case of a web site, the owner of the web site is granting you a license, subject to certain terms, to access the web site and use it. No consideration is required for a license.

From the linked article, which discusses copyright, "In the context of copyright law, a 'license' is a permission to do an act that, without the permission, would be unlawful."

In the case of a web site's terms and conditions, the owner is granting permission to you to access and use the web site subject to the terms of the license. Typically, such a license will require you to release any liability that may accrue because of your use of the site.

The Stack Exchange license, in fact, grants certain permissions related to copyright, "Subscriber may download or copy the Content, and other items displayed on the Network for download, for personal use, provided that Subscriber maintains all copyright and other notices contained in such Content."

The Stack Exchange license also places requirements on those who contribute to discussion including a requirement to "perpetually and irrevocably [license] to Stack Exchange" anything we post.

In this case, by pressing the "Post Your Answer" question, I have agreed to license my creation, this answer, to Stack Exchange.

Answer 2

The short answer is to limit liability in a whole host of ways.

Website terms and conditions seek to, first and foremost, limit liability by ensuring that the host cannot be held responsible for the actions or opinions of users.

The terms and conditions, if read, necessarily expound upon the purpose of the site. Of course they also dictate the terms of acceptable behavior/use, but liability is generally why they are everywhere.

Answer 3

Essentially it's 3 things.

1. Legal disclaimer = Everything they don't want to be responsible for.

2. Rules = What you are and are not allowed to do with their thing.

3. Exchange cost = What you allow them to get from you. Sometimes this is the bare minimum required to operate the service you want to use. E.g., they can't make you a picture gallery online if you don't allow them to touch your pictures. However very often it's also giving up data and rights they'd have to normally ask permission for or buy from you. They overcharge - same way as a merchant doesn't ask you the exact cost it took to produce the product - but charges you extra. It's the extra charge that all the fuss is about around the web.

Having detailed information about people is proven to be a valuable commodity in and of it self.

Answer 4

One answer is that website visitors are providing valuable consideration merely by visiting and spending time on a site: Websites are monetized based on traffic. There are explicit formulas that equate visits (and often the characteristics and behavior during those visits) to monetary value. Advertisers will pay based on those numbers. And even in the absence of paid advertisement, companies with no revenue have been bought based on the size and quality of their audience.

(Which I suppose leads to the question of why traditional public media don't feel the need to plaster terms of service all over their content. Perhaps that is because they are regulated by the FCC.)