Sooner or later, you will be sued. As it is inevitable, the question of "when" is less important than whether or not you are prepared for your terms to be enforced. Are you certain that your online legal agreements--clickwrap, sign-in-wrap, and browsewrap--can hold up in court? In our 3-post series, we will detail the three common types of online agreements, 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.)
Online Agreements: Browsewrap
What is a browsewrap agreement?
Browsewrap agreements do not require the user to expressly signify any sort of assent to the website’s contract terms through clicking a button or checking a box. Instead, users assent to the website terms by using the website.
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.
Image of a sample browsewrap agreement.
Are browsewrap agreements valid?
Our study found that the enforceability of browsewrap agreements is even less certain than that of sign-in-wrap agreements because no affirmative action is required for the user to assent to the browsewrap terms.
We also found that the notion that users assent to the browsewrap 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 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.
For example, the court in Register.com v. Verio found Register.com’s browsewrap valid because Verio conceded that it had actual knowledge of Register.com’s online agreement terms. 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.
Browsewrap validity: Lack of notice vs. conspicuous notice
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. Whether a user is on inquiry notice depends on the design and layout of the webpage, though courts are split on whether or not a good design and layout is enough to establish inquiry notice.
For example, the court in PDC Laboratories v. Hach Co. 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.
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, courts are unlikely to find that browsewrap agreements are 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.
Learn more about the validity of other forms of online contracts and their win/loss factors by reading the Clickthrough Litigation Trends white paper!