Technology: Click here to accept

How to create an enforceable online contract

Courts continue to provide guidelines on how to create enforceable online agreements, and, perhaps more importantly, what does not create binding terms. Several recent cases have discussed the enforceability of “clickwrap” and “browsewrap” agreements.

We are all familiar with clickwrap agreements—the terms and conditions contained in the little pop-up boxes you encounter on a website which require you to click a button indicating you accept the terms. On the other hand, as a district court noted in Nguyen v. Barnes & Noble, Inc., “Browsewrap agreements, as opposed to clickwrap agreements, are defined as ‘terms and conditions, posted on a Website or accessible on the screen to the user of a CD-ROM, that do not require the user to expressly manifest assent, such as by clicking ‘yes’ or ‘I agree.’”

In Van Tassell v. United Mktg. Grp., consumers brought a class action against an online retailer, and the retailer tried to enforce an arbitration provision in its browsewrap agreement. The retailer’s terms did not appear on either the retailer’s homepage or the checkout page. To find the retailer’s terms, consumers had to scroll down to the bottom of the homepage and click the “Customer Service” link, then scroll to the bottom the Customer Service page, or click on the “Conditions of Use, Notices & Disclaimers” link located near the end of a list of links on the page. The court held that “because no affirmative action is required by the website user to agree to the terms of a contract other than his or her use of the website, the determination of the validity of a browsewrap contract depends on whether the user has actual or constructive knowledge of a website's terms and conditions.” The court further stated that “absent a showing of actual knowledge of the terms by the webpage user, the validity of a browsewrap contract hinges on whether the website provided reasonable notice of the terms of the contract.” Given the multiple steps that consumers had to go through to find the retailer’s terms and the fact that the link to the terms was “sandwiched between” other links, the court found that the consumers did not have reasonable notice of the retailer’s terms and, therefore, the arbitration provision was not binding.

Similarly, in Nguyen v. Barnes & Noble, a consumer sued Barnes & Noble over an online transaction, and Barnes & Noble moved to compel arbitration based upon an arbitration clause in its website’s terms of use. Barnes & Noble’s terms of use were located at the bottom of the webpage from which a consumer makes a purchase, and there was a hyperlink to the terms on the bottom left corner of each webpage. The court held that Barnes & Noble “did not position any notice even of the existence of its ‘Terms of Use’ in a location where website users would necessarily see it, and certainly did not give notice that those Terms of Use applied, except within the Terms of Use.” Accordingly, the court ruled that Barnes & Noble’s arbitration clause was not enforceable.

Contributing Author

author image

Andy Goldstein

Andrew L. Goldstein is a partner in the Corporate Practice Group of Freeborn & Peters LLP. His areas of focus include multiple areas of intellectual...

Bio and more articles

Join the Conversation

Advertisement. Closing in 15 seconds.