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GoDaddy's user agreement has suffered a loss at the hands of a U.S. District Court Judge in Arizona.
A client sued the domain registration company over its practice of "parking"-- the directing of undeveloped domains to GoDaddy-created advertisements. Those advertisements bring in money, none of which is paid to the domain's registrant.
GoDaddy argued that its Universal Terms of Service granted contractual authority to engage in this practice.
The judge disagreed.
Like most web companies, GoDaddy.com's user agreement is actually a conglomeration of dozens of different contracts. It incorporates some thirty subject-specific documents.
The company's "parking" practices are governed by its Parked Page Service Agreement. It argued that this agreement had been incorporated by reference into its Universal Terms of Service, which is applicable to the plaintiff.
As a refresher, incorporation by reference requires a "clear and unequivocal" reference. Arizona also follows the Restatement, which favors the plaintiff in the event of ambiguity.
GoDaddy's Universal Terms of Service state that service agreements only apply to those who have purchased the services. Attorneys tried to argue that "parking" services are bundled with name registration, but the judge disagreed.
Nowhere in the Parked Page Service Agreement or Universal Terms of Service does it state that the services have been bundled. It's also unlikely that a customer would "purchase" a free service when it gives him no benefit.
GoDaddy now faces a class-action lawsuit, which alleges unjust enrichment, amongst other claims. A single and inclusive GoDaddy user agreement probably could have prevented this outcome.