MEMBERSHIP AGREEMENTS

IVAN  HOFFMAN, B.A., J.D.


        “Community” is the current buzz-word on the Net.  Everyone wants to build one to enhance “stickiness” (another buzz-word) on their sites.  [Buzz-words, of course, have a way of changing rapidly in this era.]  One way some owners have chosen to build this community is by creating memberships in something.  Legal issues arise when the owner makes this decision.

        Initially, this article deals *only* with membership agreements for persons over the age of 18, the minimum age of majority in most states in the United States.  There are a number of separate issues that arise if your community is open to minors, including issues arising under both federal and some state laws, but that discussion is beyond the scope of this article.  However, the site’s membership agreement must clearly state, preferably right in the very beginning of the terms and conditions for membership, that membership is limited to those over 18 and that by agreeing to become a member, the visitor represents and warrants that he or she is in fact over 18.

        And further, although this article covers many of the issues that may arise in such an agreement, the manner in which those issues are resolved is a matter for discussion between the site owner and the attorney creating the agreement since site owners will differ on what they want and need.  Thus, I can only raise the issues in the form of questions to be addressed.

Some of the Other Issues That Must Be Covered

1.   Nature of the Service. What is the nature of the service being provided for which the person must be a member?  In other words, what is the nature of the benefits being offered by the site and what are the reasons to become a member?   These are both legal as well as business issues since some sites may offer limited benefits for non-members but other, more “valuable” benefits to becoming a member.  There may be “step-memberships” in which either for free or for some level of payment the benefits increase.  In any event, these must be set forth in the agreement.

2. Rights of Termination.  Both the member and the owner’s rights to terminate must be set forth.  What are the circumstances when these rights arise?  And if the member has paid fees to become a member, what happens to those fees upon termination by the member or by the owner?  Are they refunded in whole or in part?

3. Obligations of the Member.  This is a very important part of the agreement since it defines what the member can, and more importantly perhaps, cannot do.  Restrictions that should be addressed include but are not limited to:
 

        These obligations should then be incorporated into other provisions in which the member represents and warrants that he or she will not violate these obligations and agrees to hold the owner harmless in the event of any such violation.

4. Rights of the Owner to Edit or Review Content.  This is a very important issue that must be addressed.  If the owner puts itself in the position of monitoring all of the material posted by others to the site, whether by this agreement or in fact, the owner may be liable for any violations of rights, including but not limited to copyright and trademark infringement, that occur as a result of the activities of a poster.  The legal exemptions carved out for site owners including service providers generally are based upon the premise that the site owner has no opportunity to edit all materials placed on the site and thus should not be liable for these claims.  But the agreement must touch upon these issues and how it does depends upon the nature of how the site owner wishes to interact with that material.

5. Rights of the Owner to the Material.  Information on the site may be gathered from members, whether biographical information, email addresses and such or, if the site allows for interactivity, from such activities such as chat discussions or postings by members.  What can the owner do, or not do, with that material? Who owns the copyrights and other intellectual property rights to any materials posted on the site by the member?  If the member owns them, what rights are granted to the site owner and its “successors and assigns” if any, to that material?  Can the owner use the material in ways perhaps not originally intended by the member?

6. Privacy Policy.  The issues raised in number 5 above are directly related to the site owner’s privacy policy, which policy should be included in the membership agreement.  And while privacy policies are not currently mandatory by law, if the site has a privacy policy, the law may be invoked to make certain that the site does not violate those policies.  That privacy policy should deal with all of the following issues among others:
 

7. Disclaimer of Warranties by the Owner.  There should be a disclaimer of all warranties and obligations on the part of the owner about any promises or liabilities.  These should be set out in a manner that *may* make such disclaimers enforceable under state and federal laws governing commerce and the Internet, such as perhaps the version of the Uniform Commercial Code that may be applicable in your state.  Keep in mind that in some circumstances such disclaimers may not be sufficient to shield the site owner from liabilities.

8. Contact Information.  Federal law that is most likely applicable to the Internet, and some state laws, require that the site owner provide information within the agreement about how the member may contact the owner to complain, to rescind the agreement, to remove the member’s information and any materials posted by the member and so on.

9. Site Logistics.  The site must be set up so that there is a link to the agreement (and any privacy policy as well, if it is not included in the agreement) prominently displayed on the front page of the site.  This link must take the visitor to the agreement and there must be a mechanism deployed whereby the visitor must affirmatively click on some sort of "I Accept These Terms and Conditions" button before the visitor can proceed through the site.  A record should be maintained of all members, that they have affirmatively agreed to become a member and so on.

Conclusion

        Since we may at any time be both site owners seeking to create a community via such an agreement as well as members ourselves in another site’s community, these and many other issues present themselves to us from both sides of the table.  With the growth of the Internet has come the growth of the needs of both members and site owners to know “the rules.”

        There are of course many other issues to be resolved and included in any membership agreement and this article is not intended to be exhaustive.  You might also want to read “The Web Site Audit Check List” for some additional information.

© 2000 Ivan Hoffman

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This article is not intended as a substitute for legal advice.  The specific facts that apply to your matter may make the outcome different than would be anticipated by you.  You should consult with an attorney familiar with the issues and the laws.
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No portion of this article may be copied, retransmitted, reposted, duplicated or otherwise used without the express written approval of the author.


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