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In our 3-post series, we detail the three common ways of capturing user assent online citing case law examples, and the factors that influence their enforceability in court. Our third post is dedicated to browsewrap agreements. (Read the first post and the second post here.)
Browsewrap agreements (also referred to as Browserwrap or browse wrap licences) are online contract or license agreements commonly used by websites. Websites that utilize browsewrap agreements typically include a notice somewhere on the screen, which states that by using the website, the user is assenting to the website’s terms and conditions. As part of the notice, websites include a hyperlink to the terms.
Both the notice and hyperlink to the terms are most often located at the bottom of the screen. Unlike a clickwrap agreement, where the user must manifest assent to the terms and conditions by checking a box, a browsewrap agreement does not require this type of manifestation of assent. Instead, users are considered to have accepted the websites terms simply by using the website.
Image of a sample browsewrap agreement.
PactSafe conducted a recent study on clickwrap litigation trends which includes case statistics related to 1,000 cases, more than 300 of which call into question the validity of browsewrap agreements. Our study found that the enforceability of browsewrap agreements has only been considered valid 13% of the time since 2003, making them even less certain than that of sign-in-wrap agreements. This is often because no affirmative action is required for the user to assent to the browsewrap's terms.
We also found that the notion that users assent to the browsewrap's terms simply by using the website is problematic because, oftentimes, users will use the website without ever knowing that a browsewrap agreement exists. For example, the court in Specht v. Netscape Communications declined to hold Netscape’s browsewrap enforceable because the hyperlink’s placement at the bottom of the screen failed to put users on notice of Netscape’s terms.
Similarly, in Hines v. Overstock.com, the court found Overstock.com’s browsewrap unenforceable because the website failed to prominently display the link to the online agreement in a way that would put users on notice of the website’s terms and conditions.
However, we found that when a user has actual notice of the agreement, courts tend to uphold browsewrap agreements. But actual notice can be difficult to obtain and hard to prove. Actual notice often requires more than just the simple implementation of a browsewrap agreement. Namely, either the user must concede that they had knowledge, or the website must show that it directly provided the user with notice of online terms, such as through a cease and desist letter.
Example 1: Register.com v. Verio
In the case of Register.com v. Verio the court found Register.com’s browsewrap valid because Verio conceded that it had actual knowledge of Register.com’s online agreement terms.
Example 2: Southwest Airlines v. BoardFirst
Additionally, the court in Southwest Airlines v. BoardFirst found that BoardFirst had knowledge of Southwest’s terms because Southwest sent BoardFirst a cease and desist letter. Therefore, the browsewrap agreement alone, would likely not have been enough to win this case.
According to our study, if the user lacks actual notice of the terms, the validity of the agreement then depends on whether the user had inquiry notice of the contract’s existence. Inquiry notice (also know as implied notice) is defined as legal notice presumed to exist when a person is in command of sufficient facts as would cause a reasonable person to make further inquiries. Whether a user is on inquiry notice varies widely its interpretation. Inquiry notice is often determined by reviewing the design and layout of the webpage as it appeared during the time in question, though courts are split on whether or not a good design and layout is enough to establish inquiry notice.
Example 1: PDC Laboratories v. Hach Co.
In PDC Laboratories v. Hach Co. the court found the browsewrap enforceable because the hyperlink was conspicuously displayed in contrasting text, and the checkout screen contained language telling the user to review the terms prior to completing the purchase.
Example 2: Nguyen v. Barnes & Noble.
On the other hand, the court in Nguyen v. Barnes & Noble held that Barnes & Noble’s browsewrap was unenforceable despite the fact that the hyperlink was prominently placed next to the buttons users must click in order to complete online purchases.
We found that all in all, today's courts are highly unlikely to find browsewrap agreements enforceable unless the parties can establish actual or inquiry notice. But establishing such notice often requires more than just a simple implementation of the browsewrap agreement. Instead, the website owner must show that it did something additional to provide the user with notice of the online agreement. As a result, the likelihood of a court enforcing a browsewrap is tenuous at best.
Not to worry though, there are newer, better forms of collecting user assent to your online agreements that your business cam implement such as clickwrap agreements or scroll wrap agreements. Learn more about the validity of other forms of online contracts and their win/loss factors by reading the Clickthrough Litigation Trends report!
Update: We have released the 2021 report of clickwrap litigation trends with more up to date best practices and case rulings from the last year. Our Clickwrap Litigation Trends: 2021 Report also analyzes the impact of the pandemic and the boon of eCommerce on the trends we see. Download your copy!