This presentation concerns the differences between policy and contract. Specifically, discussing how they differ and when there is overlap. Insight is given through discussion of case law and examples. Due to my background corporate, HR, and online/social media topics are highlighted.

1. Policies and Contracts:
Considerations for Businesses
Presented by Ryan K. Hew,
Attorney at Law, LLLC
Last updated July 8, 2013

2. Disclaimer
• The information provided in this presentation is provided
as non-specific general legal information, and should
not be construed as legal advice for any particular
situation. The information provided here should not be
relied on for any action or omission by the user.
• If you are in need of legal assistance, such as drafting
policy or a written agreement or are in conflict/dispute
with an opposing party you should seek an attorney in
your relevant jurisdiction.
• Further, I do not guarantee or warrant the use of the
resources listed, as they are only meant to demonstrate
as examples. You should seek legal assistance for a
legal review and opinion for your own use.

3. What’s the Point?
• The goal of this presentation is to get the audience
to understand that policy and contracts are two
different concepts. While there may be
overlap, one is not necessarily the other.
• The intended audience are for organizations, and
their people, whether profit or non-profit, to
consider certain aspects when drafting policy or
agreements.
• Of course with my background I will draw heavily
from social media, corporate law, and HR.

4. Content Covered
• HOWEVER, this presentation does NOT cover public
policy (i.e. policies promulgated by the
government).
• I will only focus on in this short presentation:
o What’s the Point (of this Presentation)
o Content Covered (by the Presentation)
o Your Daily Interaction (with policies & contracts)
o Definition
o Distinction
o Examples of Policies
o Overlap
o Case Law
o Clickwrap Agreements vs. Online Policies
o Handling Policy and Contract
o Resources

5. Your Daily Interaction
• People interact with both, policies and contractual
obligations on a daily basis, having a social media
account, the workplace, and even visiting an
amusement park.
• Some situations for your organization may call for
implementing a policy whether new or changing an old
one, but other times you might have need of a binding
agreement.
• Finally, there are times where one may lead to the other:
o Having a policy where all sponsors for a nonprofit must sign a licensing
agreement.
o Having an employment contract where an employee agrees to abide by all
the policies and procedures for IT security.

6. Definition
Contract Policy
• CONTRACT is a binding
obligation; it is
enforceable by
law, meaning if one
party breaches the
other owes it damages
• POLICY is a guideline
for the way a business
operates; it is a course
of action for a process
or procedure

7. Distinction
• Not all policies are contracts.
• Not all contracts are policies.
• Violating a contract may give rise to a lawsuit.
o For example, if you don’t pay an independent contractor for the work
that they did for you that you agreed to, the IC will sue for what is owed.
• BUT violating policy does not always lead to a suit.
o For example, if you run a dog daycare center and your policy is to walk
the dogs three times a day, but you miss a walk one day, the customer
cannot say “I’m going to sue you.” On the flipside, if your policy is the
dog owner must provide a leash, and one day they forget, you aren’t
going to sue them.

8. Examples of Policies
• The employee handbook – example, a dress code
not to have visible tattoos or piercings
• Retail Stores – Return Policy on Merchandise
• Airlines – policy on using flight benefits
• Bars and Restaurants – policy on employees of not
eating and drinking in front of patrons
• Corporate Social Media Policies – some are strict
and wordy, others are short and “common sense”
oriented. Consider these bullet point examples:
o Protecting Private and Confidential Information
o Respect for Fair Use Laws
o Open Dialogue and Communication

9. Overlap
• Insurance policies are definitely intended to be
binding agreements. But what about other
instances? When is there overlap?
• Sometimes a written agreement will have among
the Attachments, Schedules, etc. . . some type of
policy which would indicate it is to be part of the
enforceable agreement.
• On the following slides I am going to talk about
some cases that highlight some of the issues
between policy and contract law.

10. Case Law #1
(Employment)
• In Braun v. Wal-Mart Stores , No. 3373 EDA 2007
(June, 10, 2011) the Pennsylvania Superior Court
upheld a jury verdict of $187.6 million against
Walmart for denying employee’s meal and rest
break as promised in their employee handbooks.
The court ruled that the policies in the handbooks
were “unilateral contracts”. (under PA law)
• What the case also discussed:
o Handbooks are enforceable against the employer
o Generally, disclaimers against contract formation will preclude a breach
of contract claim, BUT
o A provision in a handbook can constitute an offer of employment which
the employee accepts by continuing performance of duties (“unilateral
contract” concept)

11. Case Law #2
(Social Media)
• In Maremont v. Susan Fredman Design Group LTD, Ms.
Maremont was a well-known designer with a large social
media following. While she was recovering from an
accident her employer started using her social media
accounts. She sued them under the Trademark Act and
Ill. Rights of Publicity Act.
• The case of PhoneDog LLC v. Noah Kravitz was
settled, but the facts are important. In this case, Mr.
Kravitz was an employee of the LLC and the company
created a Twitter account for him to use (which
contained his name). He gained approx. 17,000
followers, and after that left the company taking the
Twitter account. The company sued him for
misappropriation of trade secrets (specifically the
account login information).

12. Case Law #2 cont.
• The 2 prior cases outlined show that companies that
engage in social media marketing through
employees and independent contractors should
set-up policies or agreements that handle
ownership of accounts and usage.
• Finally, you should be aware that several states
have enacted laws or have considered legislation
to prohibit employers from accessing an
employee’s personal social media account.
Further information may be found at my site: www.hawaiiesquire.com

13. Clickwrap Agreements
vs. Online Policies
• Nowadays we just click “I Accept” and the online store
takes our credit card number and sends us stuff –
CONTRACT!
• However, many service providers use browsewrap or
clickwrap agreements to provide online services.
• An issue when there is an ongoing relationship (software
as a service (SaaS)) and use of unilateral
amendment, where the service provider can change
the agreement at will. Why?
• Because generally a contract cannot be revised after
execution of the parties unless agreed upon.
• Bottomline: for the service provider a well-drafted
unilateral amendment clause is needed and for the
recipient, generally if you can negotiate you would want
to avoid these clauses. (consider this in B2B relationships)

14. Clickwrap Agreements
vs. Online Policies Cont.
• Contrast the prior slide to online policy
documents, which includes: Acceptable
Use, DMCA/Copyright Notice, and Privacy – these
all guide how users on what your website’s policies
are on each topic.
Type of Online Policies:
• Acceptable Use – indicates what behavior is ok for a site
• DMCA/Copyright – how do you handle copyright
infringement complaints?
o Site providers have a DMCA policy as they are given “safe harbor” from
copyright liability by providing it.
• Privacy – what do you do with a user’s personal
information collected through the site?

15. Clickwrap Agreements
vs. Online Policies Cont.
• Generally, providers may change their online
policies, as I have discussed throughout prior slides.
• However, issues arise when an agreement
incorporates policy because one is meant to be
enforceable, whereas the other is meant to flexible.
• Sometimes it is best to kept them separate, and
further avoid turning policy terms into contract
terms. With the online policy documents they should
stick to the topics they cover, and nothing else.

16. Handling Policies
and Contracts
• Use BOTH written agreements and policies as tools
to approach a variety of matters.
• What’s your business model?
o What are areas where your processes might require flexibility?
o What areas might need an enforceable agreement to induce certain
behavior?
• Neither policies or agreements are set in stone. They
should be reviewed periodically for
updating/change or amendment, respectively.

17. Consider the following:
• Write in plain-English for policies that are too be
widely distributed. No point in creating confusing
policy that no one understands.
• Employee Handbooks – start with Company Mission
Statement, also include Disclaimers, Receipt and
Acknowledgment page (to be signed and dated
be employees).
• Policies – will you live by the policies you create?
• Agreements – you going to enforce the binding
obligation? Will the other side on you, if you fail your
obligation?

18. Resources
• Consider working with professionals, such as
attorneys, HR consultants, insurance, etc . . . as a fresh
set of eyes to your policies and agreements.
• Many trade associations provide “best practices” that
may serve as the basis of your policies.
• ONE SHOULD REFRAIN USING POLICIES OR AGREEMENTS
FROM THE FOLLOWING SITES WITHOUT REVIEW, YOU USE
THEM AT YOUR OWN DISCRETION:
• A comprehensive listing of social media policies:
http://socialmediagovernance.com/policies.php
• Some sites provide basic legal documents as a starting
point, such as: http://www.docracy.com/

19. The End
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