By Ruth Binger
Website owners, as technology providers, have a dilemma as they wish to facilitate business in the most efficient way. Maintaining the integrity of their software by controlling the scope of the limited software license they are offering is essential to protecting their copyrighted technology.
Given website owners are offering their services to the world, a pressing concern is a disgruntled website user who sues via a class action in the user’s home state. The issue for the courts is how many dispute resolution pre-existing legal rights a website owner can remove through its browsewrap contract, often called “Terms and Conditions,” if the website user receives little to no notice of its existence or has no knowledge that such a notice refers to a binding contract.
If you look carefully at a website you frequently use, you are likely to see various notices in capital letters in highlighted colors referencing that your use of the website is an automatic agreement to the website policies of privacy and terms and conditions. You may not know that this means you are binding yourself to a contract. If you do click on that bothersome notice link, you will most likely notice a nonnegotiable contract that contains a choice of law, agreement to arbitrate, and/or class action waiver. Given the limited attention span of a website user, most users will not click on the link. This is especially true if the website owner has buried the notice at the very end of the page, made it as inconspicuous as possible, and does not require any action to proceed with using the website.
Because of the lack of face-to-face interactions, website owners are forced to use clickwrap or browsewrap contract formats to bind the user to a contract. Both of these contracts are “take it or leave it” contracts. These contracts generally attempt to waive pre-existing legal rights by mandating a forum selection clause and choice of law (required to sue in the website’s preferred state) and/or a mandatory arbitration clause which prohibits class actions. However, to establish an enforceable contract the website owner must prove that the user assented or agreed to a contract through one of two ways:
- Clickwrap Agreement: An agreement where the website user is presented with a drop-down box or a hyperlink and must click through to access the contract. To continue with the desired transaction, the user must agree to the contract by clicking to accept. This is an actual knowledge agreement because the user was required to read the agreement.
- Browsewrap Agreement: A constructive knowledge agreement obtained through circumstances. Notice of the contract is generally found buried via a hyperlink to another web page that contains Terms and Conditions. There is no requirement that the user click on the hyperlink, much less review or agree as to what is on the hyperlink to proceed. Assent is asserted on the basis that somewhere on the page the user is alerted to a hyperlink containing the Terms and Conditions. Any use of the website (mere browsing or using services, initiating an application, ordering an item, etc.) constitutes assent.
Below are descriptions of two illustrative browsewrap cases: a 2009 Missouri browsewrap case regarding a forum selection clause and a 2016 California case concerning a browsewrap contract with an arbitration clause. The cases illustrate that enforceability of your browsewrap agreement depends upon the state/federal court in question, notice, and whether arbitration or a forum selection clause is at issue.
Courts are increasingly finding browsewrap agreements to be unenforceable. Clickwrap agreements also can be onerous and misleading. Bottom line, website owners have to carefully write their contracts to prove notice and assent given that the law is in flux.
Forum Selection Clause Example
Major v. McCallister, 302 S.W.3d 277 (Mo.App.S.D. 2009). Victoria Major, a user of a Service Magic website, sued Service Magic in a Missouri state court for violating its website representations regarding recommended vendors. Service Magic moved to dismiss on the following grounds:
- Major clicked on the button to agree to the Terms and Use.
- Major did not click on the link and never read the Terms and Use providing that all lawsuits must be bought in Denver.
Recent 2016 Arbitration Case
Long v. Provide Commerce, Inc., (Cal.Ct.App. March 17, 2016) WL 1056555. Brett Long, a user of a ProFlowers.com website owned by Provide Commerce, purchased a Mother’s Day floral arrangement which was advertised as an assembled product. However, the arrangement was delivered as a “do it yourself” product. Long filed a consumer fraud claim class action.
Ways to Increase Enforceability with Browsewrap Agreements in the Future
The law is changing rapidly now, but below are current best practices.
- Make language and hyperlinks clear and conspicuous. Do not set out to mislead. Location and conspicuousness of the contract notice link is critical. The style, mode of presentation, and placement of the contract notice is critical. Warning text should be colorful and the size, text, and location should be very clear. Say it over and over. The contract notice text and hyperlink should be placed on every single page. The hyperlink should be visible without scrolling on some of the pages.
- Use clear and specific language at the “Buy Now” phase. Make it perfectly clear that by clicking on “Buy Now” the purchaser is agreeing to a contract and provide a conspicuousness link to the contract. Place the hyperlink close enough to the “Proceed with Checkout” that the user would have to bring the link within their field of vision to complete the online order. Urge the website user to take affirmative action to demonstrate assent by reviewing terms prior to clicking a button to complete the transaction so they realize they are entering into a contract. Don’t submerge the clause so buyer won’t notice it.
- Maintain a Website Update History. Have proof that the contract terms were present on the website on the date of purchase and what the website user was required to do to manifest assent on that date.
- Coordinate. Website designers, technology experts, and attorneys have to work together. Making a website look clean and usable or software friendly will very likely conflict with the notice requirements of browsewrap agreements.
Given that more and more cases are finding browsewrap agreements unenforceable, the safest course of action may be to use a clickwrap agreement to attempt to bind the website user to your terms and conditions contract. In all events, clickwrap agreements are not failsafe. Website owners must actively try not to mislead website user customer.
Posted by Attorney Ruth A. Binger. Binger serves both emerging and mature businesses concentrating in corporate law, intellectual property and technology law, digital media law, and labor and employment law. Her commitment to the success of small to medium-sized businesses, and her understanding of multi-faceted issues inherent in operations, are what distinguish Binger’s practice.
04/19/16 9:16 AM
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