Can terms of service override any written laws?

Question

Can ToS override some/any aspects of written laws, or rights granted by written law? I know that ToS cannot compel one to commit murder, theft etc, and that most human rights are off limits. I've seen examples of the right to sue able to be waived via agreeing to a ToS.

As I understand it, there are also some consumer rights that can be surrendered (but others that can't). Are there any specific examples of rights that can be surrendered via ToS, especially where a court has upheld that capability?

Generally I'm talking about the Common Law systems in the major regions (UK, North America and Oceania). Anything that applies to (majority of) Europe would be fine too.

Answer 1

For a contract (including ToS) to be valid, one of the things it must have is "legality of objects". That is, if the contract purports to require anything that is unlawful in the jurisdiction then (barring a severance clause) it is not a contract.

In common law countries, the starting point is that people are free to contract for and about anything they like - a contract is simply a mechanism for exchanging value between the parties on whatever terms they wish. However, judges and legislatures have decided that there are some things you cannot trade and some terms that are unconscionable or against the public interest and these vary from jurisdiction to jurisdiction*.

For example, a contract is not legal in any jurisdiction if its terms seek to exclude the intervention of the courts - this is against public policy. So for example, a binding arbitration clause requiring the parties to accept a private arbitrator's decision as final excludes the courts, yes? Well, in Australia, yes, such clauses if used in a contract between parties with different bargaining power (like a Telco and its customers) are invalid because they prevent the weaker party pursuing a class action. However, they are perfectly legal in the United States because the SCOTUS has determined that the customer can persue litigation after arbitration is finished so this doesn't impede the courts. These are essentially the same laws interpreted by the courts so that they have totally opposite effects.

So this might lead you to think that you'll put one in - it'll be OK in the US and Australians will represent such a tiny share of your market that you don't care if I can't enforce my ToS there. Except, if your website is visible by Australians, you have just exposed yourself to a government fine of up to AUD 5,000,000 (say USD 3,000,000) per day for breach of Australian Consumer Law.

As a general guide (which is very stereotypical), US jurisdictions are the most permissive in the rights they will allow their citizens to give up: the US attitude is that everyone is free to make the best deal they can. European jurisdictions are the least permissive in this regard: most European countries follow a more social welfare state model and the citizen needs protecting from themselves. Commonwealth countries tend to be more in the middle.

Answer 2

Some written laws are by their nature merely default rules, others are binding in both common law and civil law countries.

For example, many countries (both common law and civil law) have a law that says something like, "someone who is not paid as agreed pursuant to a contract is entitled to statutory interest on the unpaid amount at 8% per annum, compounded annually, in the absence of an agreement to the contrary."

A ToS provision that said that any amounts payable for a breach of the ToS accrued interest at a rate of 12% per annum, compounded monthly would differ from the written law, but could override it because the law itself is merely a default provision.

On the other hand, suppose that a country has an usury law (again something common in both civil law and common law countries) that says that any provision providing for interest rates in excess of 6% are void and that in such cases no interest of any kind can be collected. In that case, a ToS providing for an interest rate of 12% per annum, compounded monthly would be void as against public policy and would not overrule the written law.

In general, a ToS that purports to override a binding non-waiveable law are void and unenforceable as a matter of public policy and provide do not provide a defense to someone who breaks the law, at least with respect to that term, and with respect to the entire agreement if that term is not severable (e.g. if it goes to the core of the agreement).

Betwixt that general analysis is the question of choice of law. Carrying on our example, charging interest generally, would be void as against the mandatory public policies of the laws of Iran, since Islamic law prohibits the charging of interest, but would be legal under the laws of Colorado in the United States.

As a general rule, a contract between two parties can specify which jurisdiction's laws apply to the contract in a choice of law provision, so long as that provision has a reasonable relationship to the parties and their agreement. So, if one party to the contract was based in Colorado, a ToS providing that Colorado law applies to the ToS would ordinarily be valid.

If the issues related to the ToS were litigated in Iceland or Utah despite local usury laws that prohibited contractual consumer interest rates in excess of 6%, the choice of law provision in the ToS would probably not itself be held to violate public policy and the ToS would probably be upheld.

But, if the issues were litigated in Iran, the court would probably hold that the choice of law provision itself violates the public policy of Iran and would probably refuse to enforce it, because the prohibition on interest in Islamic law would be considered much more fundamental (similar to the violation of the U.S. Constitution in the U.S.) than a violation of a mere arbitrary line-drawing statute from another jurisdiction.