Legal Research

Court rules ?browsewrap? agreement unenforceable

By scott

I was interested this week to come across a new ‘browsewrap’ case. A browsewrap agreements are basically ones which say you accept the terms and conditions of the website you’re using. Generally it can only be enforced if a user assents to it ? or there is a reasonable likelihood that they would be aware of the terms and conditions (T&Cs).

U.S. District Court Judge Sterling Johnson, Jr has ruled that the browsewrap agreements on Internet retailer Overstock.com’s website in unenforceable because there is no evidence that users of its website have ever read the T&Cs.

The ruling came in a dispute between the Overstock and customer Cynthia Hines, who had sued Overstock for charging her a $30 fee after she returned a vacuum cleaner. Overstock argued the case should be dismissed because its site’s T&Cs ? accessed via a link at the bottom of Overstock’s home page - provided for mandatory arbitration.

Not so, said Judge Johnson.

“In the instant case, it is clear that Plaintiff had no actual notice of the Terms and Conditions of Use…Notably, unlike in other cases where courts have upheld browsewrap agreements, the notice that “Entering this Site will constitute your acceptance of these Terms and Conditions,” ? was only available within the Terms and Conditions. Hines therefore lacked notice of the Terms and Conditions because the website did not prompt her to review the Terms and Conditions and because the link to the Terms and Conditions was not prominently displayed so as to provide reasonable notice of the Terms and conditions. Very little is required to form a contract nowadays ? but this alone does not suffice.”

This seems a very basic mistake by Overstock.

Judge Johnson essentially found that the “browsewrap” agreement did not adequately notify Hines about the arbitration provision because the website did not prompt her to review the terms and conditions and because the link to the terms and conditions were not prominently displayed.

This is a similar rational to that was used in the case Specht v. Netscape, where Netscape also had an arbitration clause in their terms and conditions for the Netscape Browser software, but here too the Court ruled against Netscape because users were able to download and use the software without agreeing to the T&C’s, therefore would not have seen the terms without scrolling down their computer screens.

The lesson here is you need to make your T&Cs and acceptance of them very visible, and acceptance of those terms ? via tick-box etc ? needs to be very clear. Of course ? in the UK at least ? you also need to make sure that even if you’ve done this that the terms themselves are not in breach of the Unfair Contract Terms Act 1977.

Full post as published by Information Overload on September 18, 2009 (boomark / email).