Your Website Terms and Conditions May Land You in NJ Court

August 2016

How well do you know what’s in your company’s Terms and Conditions? What are the Terms and Conditions asking of your consumers? If your Terms and Conditions asks your consumers to waive “clearly established” legal rights you could soon find yourself in New Jersey court defending against an obscure New Jersey statute called the Truth-in-Consumer Contract, Warranty and Notice Act (“TCCWNA”).

In the recent months, there has been a wave of lawsuits and class actions targeting the website Terms and Conditions of companies (particularly retailers) for technical violations under the TCCWNA. Much like Californian privacy laws, which apply to businesses in all states collecting data from Californian residents, the TCCWNA imposes limits on contractual terms in consumer transactions on businesses in all states available to New Jersey consumers, even if the terms are not governed by New Jersey law. What’s troublesome to companies defending a TCCWNA suit is the ability of consumers to recover damages of $100 per violation (plus attorney’s fees and costs) without the need to establish actual injury.

Companies need to be mindful of two main problems to their Terms and Conditions, and any other consumer-facing documents and communications:

1. Companies may not have a blanket savings clause where a provision is noted to be “inapplicable in some jurisdictions” or other similar phrase. Provisions unenforceable in New Jersey must specifically carve out New Jersey.

2. Companies should not contract away clearly established legal rights of a consumer or responsibilities of the company that arise from the TCCWNA, or any federal or state law. Recent cases caution against the following:

  • Having consumers waive their right to recover attorneys’ fee
  • Requiring consumers to split the cost of litigation
  • Requiring consumer to indemnify the company for claims for damages or lost property or personal injury
  • Requiring consumers indemnify the company against losses resulting from the company’s own negligence
  • Limiting the liability of a company for personal injuries or property damage
  • Shorten the statute of limitations periods by contract

It is advised that companies update their website Terms and Conditions immediately and review any language in all consumer-facing documents and communications that may waive TCCWNA consumer rights or violate “clearly established” legal rights.

If you need help determining whether your Terms and Conditions violate TCCWNA or if you have already run afoul of the statute and need counsel, please contact:

Barry Werbin at + 212 592 1418 or [email protected]

© 2016 Herrick, Feinstein LLP. This alert is provided by Herrick, Feinstein LLP to keep its clients and other interested parties informed of current legal developments that may affect or otherwise be of interest to them. The information is not intended as legal advice or legal opinion and should not be construed as such.