Why Yahoo’s Terms and Conditions are Not the Point

January 15, 2009

Following my earlier post I noticed this piece by Dayne Kaufman in Net Search Direct about Yahoo’s US terms for PPC advertisers.  He concludes

“after you spend hours creating your campaigns, adding your keywords and deciding how much money you want to bid on each term, Yahoo has the right to “optimize” however they feel necessary.  Not only can they delete some of your keywords and replace them with different ones, they can also increase and/or decrease your bids.  Best of all, you are not told about the modification(s) until afterwards.”

So I took a look at Yahoo’s terms for UK users.  Clause 7 pretty much allows Yahoo to do anything it wants with its customers’ advertising materials.

So it’s not the terms and conditions per se that interest me so much as what Yahoo is actually doing in practice judging by the comments to Andy Beal’s post here.

English contract law and European Directives give the judiciary plenty of scope to find a contract term unenforceable if it is unusual or unfair.  So tucking an unexpected provision away in the small print is not the best approach to ensuring a water tight contract  capable of standing up in court.  If you want an unusual term to be effective, you should specifically draw it to customers’ attention.

However, in practice as few can afford to take the likes of Yahoo to court, unfair terms apply until the customer complains.  It remains to be seen whether the complaints Yahoo has received will be enough to deter Yahoo from interfering in their customers’ pay per click campaigns.

This makes me wonder whether in this Net age when information overload is such a real problem, it is appropriate for every business to have its own unique contract terms?  Surely people cannot be expected to read lengthy, and often incomprehensible terms each time they sign up for something?  For example, is it appropriate each time you buy a piece of software that you should have to wade through the minutiae to find out what a particular icensor does and not permit you to do with their software?  Isn’t there a case for drafting industry standard terms?  Something like the equivalent of Creative Commons for terms of business.

Imagine how much simpler and fairer it would be if every industry arrived at a common set of terms following full discussions and negotiations with all interested parties, including representatives of consumers.  Then if a business wanted to add extra terms, it would be so much easier for users to notice the deviations from the norm.  Some industries already have standard terms – for example, Royal Institute of British Architects.  If only this practice could spread to industries like software.

The whole issue of terms of business is in the meantime highly unsatisfactory.  The way we lawyers generally approach contract drafting is becoming increasingly inappropriate.  Our entire training requires that we draft terms that will be the most favourable to our own clients.  The traditional reasoning behind this is that the other side, if it is smart enough to notice which terms are adverse to their interests, will negotiate.  In this way a more favourable set of terms will be arrived at for the deal in hand.  However, given that many contract terms are not negotiated means that terms are generally biased in favour of the supplier.  Commercial realities then come into play with regards to how those terms are used.  In Yahoo’s case, they have little competition (given that Google owns Yahoo), and customer backlash is the main force that will restrain them from applying their contractual powers in the ways they have reportedly been doing.

Where standard (non negotiable) terms of business are drafted lawyers will bear in mind legislative provisions, such as in the Unfair Contract Terms Act to ensure that the exclusions of liability conform with the rules.  But there are a host of provisions in contracts that are not governed by rules imposing requirements to be fair, and these will be biased very much in favour of the business itself.

It is therefore inappropriate to expect a lawyer drafting terms for one of these parties to be fair to both sides.  So, the whole area of contracts is extremely unsatisfactory and something that needs to change.