Browse-wrap agreement enforceability

Notice to the user is the key to enforceability

You’ve probably seen Web sites that refer to “browse-wrap” agreements, with notices claiming that merely by using the Web site, you’re agreeing to the terms and conditions of the agreement.

The case law indicates that a party claiming enforceability of a browse-wrap agreement — which is typically the Web site host, seeking to enforce a clause requiring arbitration or mandating a particular state’s law or jurisdiction — must show that:

• the user was given sufficient notice that any continued use of the Web site, in and of itself, constituted assent to the browse-wrap agreement’s terms, and
• thereafter, the user indeed continued to use the site.

Selected case law

The opinion in Southwest Airlines Co. v. Boardfirst, L.L.C., No. 3: 06-CV-0891-B, slip op. at 7-12 (N.D. Tex. Sept. 12, 2007), contains a useful survey of case law and commentary about browse-wrap agreements. A federal district court in Dallas granted, in part, Southwest’s motion for partial summary judgment; it issued a permanent injunction against Boardfirst’s accessing the Southwest Airlines Web site to check in passengers for their flights in order to secure early-boarding-group status for them. The court held that Boardfirst was bound by the terms of the Southwest browse-wrap agreement, and that Boardfirst’s check-in activities violated those terms.

A similar result occurred in Hubbert v. Dell Corp., 359 Ill. App.3d (Ill. Ct. App. 2005), where, on appeal, an Illinois state appellate court reversed the trial court’s refusal to compel arbitration. The appeals court took note of how prominently Dell had warned the user that Dell’s terms and conditions would apply:

… The blue hyperlink entitled “Terms and Conditions of Sale” appeared on numerous Web pages the plaintiffs completed in the ordering process[ ... and] should be treated the same as a multipage written paper contract. The blue hyperlink simply takes a person to another page of the contract, similar to turning the page of a written paper contract. Although there is no conspicuousness requirement, the hyperlink’s contrasting blue type makes it conspicuous. Common sense dictates that because the plaintiffs were purchasing computers online, they were not novices when using computers. A person using a computer quickly learns that more information is available by clicking on a blue hyperlink.

Additionally, on three of the defendant’s Web pages that the plaintiffs completed to make their purchases, the following statement appeared: “All sales are subject to Dell’s Term[s] and Conditions of Sale.” This statement would place a reasonable person on notice that there were terms and conditions attached to the purchase and that it would be wise to find out what the terms and conditions were before making a purchase.

The statement that the sales were subject to the defendant’s “Terms and Conditions of Sale,” combined with making the “Terms and Conditions of Sale” accessible online by blue hyperlinks, was sufficient notice to the plaintiffs that purchasing the computers online would make the “Terms and Conditions of Sale” binding on them.

Because the “Terms and Conditions of Sale” were a part of the online contract and because the plaintiffs did not argue that their claims were not within the scope of the arbitration agreement, they were bound by the “Terms and Conditions of Sale,” including the arbitration clause.

[Emphasis and extra paragraphing added.]

To like effect is PDC Laboratories v. Hach Co., No. 09-1110, slip op. at 5-6 (C.D. Ill., Aug. 25, 2009): A federal district court held that defendant Hach Co.’s browse-wrap terms and conditions were sufficiently conspicious because they were hyperlinked three times. (The court denied Hach’s motion for summary judgment on other grounds.)

Another good review of case law for browse-wraps is found in Hines v. Overstock.com, Inc., 2009 U.S. Dist. LEXIS 81204, slip op. at 6-8 (E.D.N.Y. Sept. 4, 2009): A federal district court denied defendant Overstock’s motion to stay or dismiss pending arbitration, on grounds that defendant Overstock’s browse-wrap agreement did not give plaintiff Hines sufficient notice of an arbitration clause to bind her to it.

An early browse-wrap decision was Specht v. Netscape Communications Corp., 306 F.3d 17 (2d Cir. 2002): In an opinion by now-Justice Sotomayor, the influential Second Circuit court of appeals affirmed denial of a motion to compel arbitration; the court agreed that:

“… a reasonably prudent Internet user in circumstances such as these would not have known or learned of the existence of the license terms before responding to defendants’ invitation to download the free software, … defendants therefore did not provide reasonable notice of the license terms.

In consequence, plaintiffs’ bare act of downloading the software did not unambiguously manifest assent to the arbitration provision contained in the license terms.

[Emphasis and extra paragraphing added]

The Specht court pointed out that:

The signal difference between downloading Communicator and downloading SmartDownload was that no clickwrap presentation accompanied the latter operation.

Instead, once plaintiffs Gibson, Gruber, Kelly, and Weindorf had clicked on the “Download” button located at or near the bottom of their screen, and the downloading of SmartDownload was complete, these plaintiffs encountered no further information about the plug-in program or the existence of license terms governing its use.

The sole reference to SmartDownload’s license terms on the “SmartDownload Communicator” webpage was located in text that would have become visible to plaintiffs only if they had scrolled down to the next screen.

[Emphasis and extra paragraphing added, footnote omitted.]