The answer appears to be eventually yes.

Recently in the Daily Mail Netflix revealed that they were monitoring people who give out their password to friends. At this time there seems to be no plans to crack down on sharing now but that won't be a permanent situation.

The rub for the company according to a vlog from Netflix chief product officer Greg Peters  the company is looking for a friendly way to limit sharing subscriptions.  But he added it isn't too upsetting to them as long as they're not all watching at the same time, more people can use the same login as long as they know the username and password.

Below you can see the quarterly report and Greg Peters remarks on sharing at 30:28.

So what did you actually agree to when you clicked the I Agree box on your agreement with Netflix?

The following is from the Netflix terms of service section 4.2,

4.2. The Netflix service and any content viewed through our service are for your personal and non-commercial use only and may not be shared with individuals beyond your household. During your Netflix membership, we grant you a limited, non-exclusive, non-transferable right to access the Netflix service and view Netflix content through the service. Except for the foregoing, no right, title or interest shall be transferred to you. You agree not to use the service for public performances.


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