Cloverly Terms & Conditions: Top 4 Legal Risks and How to Fix Them | Erayaha

## When Legal Ambiguities Cost Millions: A Case Study on Cloverly’s Terms & Conditions

When we examined Cloverly’s Terms & Conditions, our analysis revealed several legal and logical risks that could expose the company to regulatory fines, litigation costs, and significant business losses. For example, ambiguous liability clauses and unclear data usage permissions could result in disputes costing upwards of $500,000 in legal fees or trigger GDPR fines of up to €20 million. Here, we break down the four most pressing issues and provide actionable improvements to strengthen enforceability and compliance.

1. Uncapped Liability for Supplier Misconduct

Cloverly’s current terms state that the company is not responsible for any liability arising from acts or omissions by suppliers. However, the clause lacks specificity regarding gross negligence or willful misconduct, creating a loophole that could expose Cloverly to high-value claims if a supplier’s actions result in regulatory breaches or customer losses. In similar cases, companies have faced multi-million dollar lawsuits due to insufficient limitation of liability language.

Legal Analysis

critical Risk

Removed

Added

The Company shall not be responsible to you for any liability arising from any acts or omissions by or any interactions with a Supplier, including anyexcept in cases of the Company’s gross negligence, misrepresentations orwillful misconduct by a, or breach of applicable law. Liability for Supplier actions is limited to the maximum extent permitted by law.

Legal Explanation

The original clause is overly broad and may be unenforceable if it attempts to disclaim liability for gross negligence or willful misconduct. The revision narrows the exclusion, aligns with public policy, and reduces litigation risk.

2. Vague Data Usage and Service Data License

The terms grant Cloverly a broad, perpetual, and irrevocable license to use Service Data but do not clearly define the scope or provide opt-out rights for sensitive information. This ambiguity could lead to GDPR or CCPA violations, with potential fines reaching 4% of annual global turnover. Clearer definitions and user rights are essential to mitigate these risks.

Legal Analysis

high Risk

Removed

Added

You hereby grant the Company a limited, nonexclusive, perpetualrevocable, irrevocable, worldwide, sublicensable, and royalty-free license to use the Service Data submitted, posted or displayed by you through the Service, solely as necessary to the extent needed to provide, enhance and promoteimprove the Services (and the related benefit, subject to your right to withdraw consent for use of the Services)sensitive or personal data, and in accordancestrict compliance with applicable data privacy laws, rules or regulationsincluding GDPR and CCPA.

Legal Explanation

The original perpetual and irrevocable license is inconsistent with GDPR and CCPA requirements for data subject rights, including the right to withdraw consent and request deletion. The revision ensures compliance and limits risk.

3. Unilateral Service Modification Without Safeguards

Cloverly reserves the right to change, suspend, or discontinue services at any time without user recourse. This one-sided provision could result in significant business disruption for enterprise customers, leading to breach of contract claims and damages that can easily exceed $250,000 per incident. Adding notice and transition requirements would better protect both parties.

Legal Analysis

high Risk

Removed

Added

We retain the right to change the form and functionality of the Service with or without notice to you. We also retain the right to create limits on and related to use of the Service in our sole discretion at any time with or without notice. We may change, suspend, or discontinue any partspart of or the entire Service at any time, including the availability of any product, service, feature or content. You agreeprovided that we shall not be liable towill give you at least thirty (30) days’ prior written notice for material changes or discontinuation, and will use commercially reasonable efforts to any third partyprovide transition assistance. Our liability for any modification, suspension or discontinuance ofservice changes is limited to fees paid for the Service or any part thereofaffected period.

Legal Explanation

Unilateral modification without notice or recourse is likely to be challenged as unconscionable and may trigger breach of contract claims. The revision adds notice and transition requirements to protect both parties.

4. Insufficient Refund Policy Transparency

The refund policy gives Cloverly sole discretion to approve or deny refunds, without clear criteria or timelines. This lack of transparency can lead to customer disputes, regulatory scrutiny, and reputational damage, especially if large transactions are involved. Regulatory actions for unfair commercial practices can result in fines of $50,000 or more.

Legal Analysis

medium Risk

Removed

Added

Eligibility for any refundsRefund eligibility will be determined by the Companybased on clear, objective criteria set forth in its sole discretionthese Terms. You may request a refund of your payment by contacting theThe Company at support@cloverly.com. Any approved refunds will be less any applicable taxes, fees and any amounts redeemed for Carbon Credits or which have already been providedrespond to Suppliers for purchase of Carbon Credits. Refunds only apply to Marketplace purchases andrefund requests for refunds must be received by the Company within thirtyten (3010) business days after payment has been completedand provide written reasons for theany denial. Refunds will be processed in accordance with applicable Carbon Creditsconsumer protection laws.

Legal Explanation

Sole discretion without objective criteria or timelines is likely to be deemed unfair or unenforceable under consumer protection laws. The revision introduces transparency, timelines, and legal compliance.

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Conclusion: Proactive Legal Protection Is Essential

Our analysis shows that addressing these four issues can dramatically reduce legal exposure, improve customer trust, and ensure compliance with global regulations. Proactive contract improvements are far less costly than defending against lawsuits or regulatory fines.

Are your contracts exposing your business to preventable risks?
How often do you review your terms for compliance with new regulations?
What would a single dispute cost your organization in time and money?

This analysis is for educational purposes only and does not constitute legal advice. For actual legal guidance, consult with a licensed attorney. This assessment is based on publicly available information and professional legal analysis. See erayaha.ai’s terms of service for liability limitations.