Cases and Litigation

6 Cases of That Changed Clickwrap Litigation Forever

Top Cases in Development of Clickwrap Litigation-02

In their opinions and analysis, courts routinely turn to several cases that are seen as defining the industry. These 6 cases have been instrumental in the development of clickwrap litigation since it first appeared in court almost 20 years ago.

Content Download: Clickwrap Litigation Trends: 2021 Report

Specht v. Netscape Communications, Inc.

This case is often credited as the first real clickwrap case, and dates back to 2002. The court in Specht recognized that the fundamental components of contract law remain present when contracting electronically, noting that “a transaction, in order to be a contract, requires a manifestation of agreement between the parties.” The court then made several important findings:

  • “A consumer’s clicking on a download button does not communicate assent to contractual terms if the offer did not make clear to the consumer that clicking on the button would signify assent to those terms.”
  • “An offeree, regardless of apparent manifestation of his consent, is not bound by inconspicuous contractual provisions of which he is unaware, contained in a document whose contractual nature is not obvious.”
  • “A reference to the existence of license terms on a submerged screen is not sufficient to place consumers on inquiry or constructive notice of those terms.”

Cases over the past two decades quote these findings frequently, and judge clickwrap agreements based on adherence to these basic principles.

Sgouros v. Trans Union Corp.

In Sgouros v. Trans Union Corp, the court notes that many courts around the country recognize that clicking a button or checking a box is sufficient to signify acceptance of a contract. The court further states that these agreements are fine, “as long as the layout and language of the site give the user reasonable notice that a click will manifest assent to an agreement.” For example, when terms are displayed using a hyperlink, rather than embedded directly on the screen, the court notes that there should be a “clear prompt directing the user to read them.”

Nicosia v., Inc.

This case is one of the most heavily cited. This court determined that “whether there was notice of the existence of additional contract terms presented on a webpage depends heavily on whether the design and content of that webpage rendered the existence of terms reasonably conspicuous.” When screens are cluttered with information, buttons, and links, courts are likely to find that users were not put on notice of the terms. Additionally, when the link to the terms appears in “obscure sections of a webpage that users are unlikely to see,” courts are not likely to enforce them. Finally, courts look at the words used on the screen, and whether the language indicates that the user is entering into an agreement.

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Fteja v. Facebook, Inc.

The court in this case noted that courts routinely uphold clickwrap agreements for the principal reason that the user has affirmatively assented to the terms of agreement by clicking "I agree."

Meyer v. Uber Technologies, Inc.

The court in this case reasoned that if the screen design is simple, with few buttons or links, courts are more willing to find that users were provided with adequate notice.

Nguyen v. Barnes & Noble, Inc.

The court in this case focused a lot of attention on the concept of inquiry notice, reasoning that where there is no evidence of actual notice, users are still bound to the terms “if a reasonably prudent user would be on inquiry notice of the terms.” Whether a user is on inquiry notice depends on the content and design of the screen the user encounters. The court found that users are less likely to be on inquiry notice if the link to the terms is “buried at the bottom of the page or tucked away in obscure corners of the website where users are unlikely to see it.” Additionally, users are less likely to be on inquiry notice if the website fails to prompt users to take an affirmative action to signify assent to the terms. 

How Did This Impact Clickwrap Litigation in 2020?

Cases over the past year have largely followed the rules and reasonings of the aforementioned cases. The following is a breakdown of what courts over the past year considered when determining the enforceability of online terms:

Related Content: Clickwrap Litigation: Trends and Statistics Across Industries

Best Practice for Screen design

  • Is the screen simple and uncluttered?
  • Do fonts, font sizes, and font colors contrast well against the background?
  • Is the entire screen visible at once?
  • Is the checkbox unchecked by default?
  • Is the language on the screen consistent with the terms referenced?

Best Practice for Reasonable notice

  • Are users alerted to the existence of the terms with specifically clear language?

Best Practice for Opportunity to read

  • Are users required to click the hyperlink to the terms?
  • Are users advised to read the terms prior to taking the action to manifest assent?
  • Does the hyperlink resemble a traditional (blue and underlined) hyperlink?

Assess Your Clickwrap Risk

It is easy to see that the courts have based many of their rulings on clickwrap litigation on these precedential cases. Cases again Barnes and Noble, Amazon, and Uber - to name a few - have set the standard for how cases are assessed and ruled on even now. To learn more about old and current cases in clickwrap litigation, what that means for different industries, and best practices to follow, download our Clickwrap Litigation Trends: 2021 Report

clickwrap litigation trends 2021 report

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