Courts Increasingly Recognize Contract and Warranty Claims Based on Privacy Policies
As data privacy litigation evolves, businesses must be aware that privacy policies are no longer just aspirational statements but can form the basis for breach of contract and warranty claims. A recent analysis by Jackson Lewis P.C. highlights a growing trend in U.S. courts: plaintiffs are asserting that companies have violated privacy-related promises made in their own public-facing policies, notices, and terms of service.
Key Legal Theories Emerging:
- Breach of Express Contract: Where companies explicitly promise to protect user data or restrict data sharing and then fail to comply.
- Breach of Implied Contract: Even absent specific promises, businesses may create enforceable obligations based on the nature of their relationship with users.
- Breach of Express or Implied Warranty: Companies may be held liable when their representations about data security, whether stated or reasonably expected, fall short of practice or industry standards.
Commercial Context Takeaways:
- Policies Can Be Binding: Courts are increasingly treating privacy policies and website terms as enforceable contracts, especially when users rely on them in exchange for providing personal data.
- Litigation Risk Is Growing: Claims based on broken privacy promises are appearing in a variety of contexts, from data breaches to digital advertising practices.
- Risk Mitigation Requires Cross-Functional Review: Businesses should regularly coordinate among legal, IT, and marketing departments to ensure that privacy-related communications are accurate, updated, and reflect actual practices.
- Compliance Is Not Enough: Even well-meaning privacy efforts can result in litigation if they are inconsistent with public statements or implied expectations.
To reduce exposure, companies should audit their data protection frameworks, review all public-facing privacy statements, and ensure alignment between what is promised and what is actually practiced.
This trend represents a significant expansion in commercial litigation risk tied to data privacy, placing increased emphasis on internal governance, clarity in customer communications, and cross-functional compliance strategies.
This post is for informational purposes only and does not constitute legal advice. If you have questions about your specific situation, it is recommended that you consult with a lawyer for assistance. Nothing herein is intended to create any attorney-client relationship between you and DLM LAW.
