I've been looking at a few financial companies lately, and I wanted to talk about some clauses I consider unreasonable that are found in the legal agreements they expect you to click through. I mean, I'm sure that nearly everyone clicks through these sorts of things without reading them (much less intending to be bound by them) but if we ARE going to create legal agreements they should be ones that are at least minimally fair and I reserve the right to at least gripe about them on my blog.
The first agreement is from Personal Capital -- a company that helps investors analyze their portfolios. I'll just quote directly from the email I sent them (and -- of course -- never recieved a reply).
For one thing, the agreement says that:We reserve the right to change or modify this Agreement [...]. If we decide to change this Agreement [...], we will post such changes on the Dashboard or on our website, and such changes will be effective at such time.This does not provide any means for me to view or review any modifications, nor does it restrict itself to modifications that are "reasonable" or in line with the previous agreement. So this means that the you could add a clause "...and you must pay a $500 service fee each time you visit the website" and I would owe the $500 service fee just for attempting to view the updated terms and conditions. Or you could add other conditions that I find unacceptable and provide me with no way to opt out of those.
Secondly, I am not willing to sign an agreement that prohibits me from telling anyone if fraud is committed or I have to cancel the service. You have a clause stating that:If you receive evidence that someone has committed fraud by accessing your Account you must contact us IMMEDIATELY at email@example.com another clause stating that the way I may terminate the agreement is to:Email firstname.lastname@example.org from the email address associated with your Account, indicating "CANCEL" in the subject line of the message.However, you also have a clause stating that:You agree that all Feedback becomes our confidential information ("Confidential Information"). [...] You agree not to disclose or share any of our Confidential Information with any third party, including, without limitation, any members of the press or colleagues. Feedback may be submitted to email@example.com.So, as I read this, you are claiming that if anyone commits fraud by accessing my account (or if I want to close my account) I must send you that information via this email and thereby I agree not to disclose it to any third party. I don't even see an exception for submitting such information to an arbitrator -- I suppose I am also prohibited from sharing such information with an arbitrator!
I realize that nearly everyone will look at this and say "there's nothing to be done about it, this is what our legal department requires". And perhaps there is someone in the legal department who wrote this and is thinking "we don't mean to be unreasonable... you know we would never intend the kinds of things you suggest". But if that's the case then you shouldn't write them into the terms of service. An opportunity to object to unilateral contract changes before they go into effect is completely standard in contracts, and the company should be granted a right to copy and use information sent to standard support emails, not a right to exclude the information from being used in any other fashion.
I regret that I cannot even evaluate your product because of your unreasonable legal terms. If you have any response to this feedback, I would be quite interested to hear it.
-- Michael Chermside
Now look... if these click-through agreements were ACTUAL "contracts" -- a meeting of the minds between two parties entering into an agreement to their mutual benefit then there wouldn't be an issue. I would mention the unreasonable clauses, they would realize that this wasn't what they intended, and we would agree to a revised version that didn't have the bits I found objectionable. I mean, I presume they aren't ACTUALLY trying to cheat me.
But they aren't really an agreement between two parties. These kinds of agreements serve as a magical talism immunizes the company from being held to account by a court (or arbitrator). Which is why the company will never write me back and update the agreement.
My second example, though, is intentional on the part of the company that created the agreement. EquityZen is a company offering a way to invest in pre-IPO companies. (Sorry - available only to accredited investors). I hear it has a reasonably good reputation.
I was interested in looking at what they offered, and while signing up for the service they expected me to agree to the following Confidentiality Agreement:
This Confidentiality Agreement (the "Agreement"), effective as of the date of your acceptance by clicking the appropriate button below (the "Effective Date"), is by and between you (the "Recipient") and EquityZen Inc.
WHEREAS, in connection with Recipient's consideration of a possible transaction (the "Transaction") relating to certain investment opportunities presented by EquityZen Inc. or its affiliates (the "Disclosing Party" and such investment opportunities, the "Investment Opportunities"), the Disclosing Party has provided certain information which is non-public, confidential, or proprietary in nature; and
WHEREAS, the Disclosing Party wishes to protect and preserve the confidentiality of such information.
NOW, THEREFORE, in consideration of the mutual covenants, terms and conditions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
For purposes of this Agreement, the following terms have the following meanings:
"Evaluation Material" means all information, data, documents, agreements, files and other materials, whether disclosed orally or disclosed or stored in written, electronic or other form or media, which is obtained from or disclosed by the Disclosing Party or its Representatives before or after the date hereof regarding the Investment Opportunities and the Transaction, including, without limitation, proprietary analysis regarding the Investment Opportunities, and information and documentation relating to the Transaction and the operation of the Disclosing Party's business platform. The term "Evaluation Material" as used herein does not include information that: (i) at the time of disclosure or thereafter is generally available to and known by the public (other than as a result of its disclosure directly or indirectly by the Recipient or its Representatives in violation of this Agreement); (ii) was available to the Recipient from a source other than the Disclosing Party or its Representatives; or (iii) has been independently acquired or developed by the Recipient without violating any of its obligations under this Agreement.
"Person" means any individual, partnership (whether general or limited), limited liability company, corporation, association, trust, members of joint venture entities or other entity.
"Representatives" means, as to any Person, such Person's affiliates, and its and their respective directors, officers, employees, managing members, general partners, agents and consultants (including attorneys, financial advisors and accountants).
Other terms not specifically defined in this Section 1 shall have the meanings given them elsewhere in this Agreement.
The Recipient shall keep the Evaluation Material strictly confidential and shall not use the Evaluation Material for any purpose other than to evaluate, negotiate and consummate the Transaction. The Recipient shall not disclose or permit its Representatives to disclose any Evaluation Material except: (a) if required by law, regulation or legal or regulatory process, but only in accordance with Section 5, or (b) to its Representatives, to the extent necessary to permit such Representatives to assist the Recipient in evaluating, negotiating and consummating the Transaction; provided, that the Recipient shall require each such Representative to be bound by the terms of this Agreement to the same extent as if they were parties hereto and the Recipient shall be responsible for any breach of this Agreement by any of its Representatives.
Except for such disclosure as is necessary not to be in violation of any applicable law, regulation, order or other similar requirement of any governmental, regulatory or supervisory authority, the Recipient shall not, and shall not permit any of its Representatives to, without the prior written consent of the Disclosing Party, disclose to any person the existence or contents of this Agreement.
The Recipient understands and agrees that none of the Disclosing Party, the Company or any of their respective Representatives: (a) have made or make any representation or warranty hereunder, expressed or implied, as to the accuracy or completeness of the Evaluation Material or (b) shall have any liability hereunder to the Recipient or its Representatives relating to or resulting from the use of the Evaluation Material or any errors therein or omissions therefrom. The parties agree that unless and until a definitive agreement between the Disclosing Party and Recipient has been executed and delivered with respect to the Transaction, the Disclosing Party will not be under any legal obligation of any kind whatsoever with respect to the Transaction, including any obligation to (i) consummate a Transaction, (ii) conduct or continue discussions or negotiations or (iii) enter into or negotiate a definitive agreement. The Disclosing Party reserves the right, in its sole discretion, to reject any and all proposals made by the Recipient or on its behalf with regard to the Transaction, to terminate discussions and negotiations with the Recipient at any time and to enter into any agreement with any other Person without notice to the Recipient or any of its Representatives, at any time and for any reason or no reason.
If the Recipient or any of its Representatives is required to disclose any Evaluation Material, by law, regulation or legal or regulatory process, the Recipient shall take all reasonable steps to preserve the privileged nature and confidentiality of the Evaluation Material, including requesting that the Evaluation Material not be disclosed to non-parties or the public.
At any time upon the Disclosing Party's written request, the Recipient shall promptly, and in any event no later than ten days after the request, return all Evaluation Material (including all copies, extracts or other reproductions) to the Disclosing Party or certify in writing to the Disclosing Party that such Evaluation Material (including any Evaluation Material held electronically) has been destroyed. Notwithstanding the return or destruction of Evaluation Material, the Recipient and its Representatives shall continue to be bound by their obligations of confidentiality and other obligations hereunder.
To the extent that any Evaluation Material includes materials subject to the attorney-client privilege, the Disclosing Party is not waiving, and shall not be deemed to have waived or diminished, its attorney work-product protections, attorney-client privileges or similar protections and privileges as a result of disclosing any Evaluation Material (including Evaluation Material related to pending or threatened litigation) to the Recipient or any of its Representatives.
This Agreement shall continue for a period of three years after the Effective Date.
This Agreement shall be governed by the laws of the State of New York.
This Agreement sets forth the entire agreement regarding the Evaluation Material, and supersedes all prior negotiations, understandings and agreements. No provision of this Agreement may be modified, waived or changed except by a writing signed by the parties hereto.
If any provision of this Agreement, or the application thereof to any Person, place or circumstance, shall be held by a court of competent jurisdiction to be invalid, unenforceable or void, the remainder of this Agreement and such provision as applied to other Persons, places or circumstances shall remain in full force and effect.
Neither this Agreement nor any of the rights or obligations hereunder may be assigned by any party without the prior written consent of the non-assigning party. Any purported assignment without such consent shall be void and unenforceable.
I am, at the moment, studying this agreement -- I have not yet agreed to it. In fact, I have a serious concern with this. I have no objection to keeping confidential the materials that they share with me. My concern is with clause 3 which states that I agree not to reveal that this confidentiality agreement exists, nor the content of it.
I think this is an unreasonable condition. I don't typically (this blog entry excepted) go around talking to people about the contents of click-through legal agreements I made. And, of course, I don't intend to reveal any of the confidential evaluation material that is provided to me. But if it ever DID come up, I would prefer to say something like, "I can't talk about that because I signed a confidentiality agreement." rather than some vaguely worded "I can't talk about that and I can't tell you why I can't talk about it.".
Which is why now -- BEFORE I agree to this 3-year-long vow of secrecy -- I am publishing this blog entry. Because if I DO agree to it I can no longer say so.