Cases and Litigation

'Case' Studies: March Online Contract Acceptance Case Reviews

How Legal can Take Advantage of Clickwrap-13

PactSafe recently published, Clickwrap Litigation Trends 2021 Report, the latest version of the Litigation Report discussing the latest trends in clickwrap litigation. The report includes statistics on clickwrap litigation specific to 2020, highlights the importance of screen design, and analyzes the pandemic’s impact on the industry.

The report also discusses some of the original cases that are seen as defining the clickwrap litigation landscape and informing the best practices we know today. These cases are heavily cited and authoritative. As a result, we decided to dedicate this month’s case update newsletter to those cases.

In this month’s newsletter, check out cases involving Netscape Communications, Barnes & Noble, TransUnion Corp., Amazon.com, and Uber.

1. Specht v. Netscape Communications Corp.

Dating back to 2002, this case is seen as the “original” clickwrap case. At the bottom of the webpage users went to in order to download software, Netscape included language “Please review and agree to the terms.” This language was only visible to users if they scrolled down to the bottom of the screen, and users were not otherwise required to affirmatively indicate their assent to the terms.

The court 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 reasoned that “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.”

Furthermore, “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.” The court ultimately concluded that “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."

2. Nguyen v. Barnes & Noble, Inc.

Barnes & Noble included a link to the terms on the bottom left-hand corner of every page on Barnes & Noble’s website, including the checkout page. If a user clicked on the hyperlink to the terms, he would see the language at the very top of the terms themselves that “By visiting any area in the Barnes & Noble.com Site, creating an account, or making a purchase via the Barnes & Noble.com Site... a User is deemed to have accepted the Terms of Use.”

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.

Because Barnes & Noble included the link at the bottom of each webpage and did not otherwise call the terms out to the user or require users to take an action to explicitly assent to the terms, the court found that users were not on reasonable notice.

3. Sgouros v. TransUnion Corp.

TransUnion Corp encompassed their terms in a scroll wrap directly on the screen, and required users to check a box labeled “I Accept & Continue” when creating an account. The court here 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.”

But in this case, the screen design was misleading for consumers. Users believed that checking the “I Accept” checkbox meant that they consent to TransUnion obtaining their personal information. The notice surrounding the checkbox “says nothing about contractual terms.” And “no reasonable person would think that hidden within that disclosure was also the message that the same click constituted acceptance of the [terms].” As a result, TransUnion was unable to enforce their terms.

4. Nicosia v. Amazon.com, Inc.

Amazon alerted users when checking out that “by placing your order, you agree to Amazon.com’s privacy notice and conditions of use.” The 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.

The court found that Amazon’s screen was littered with “between fifteen and twenty-five links” and “various text is displayed in at least four font sizes and six colors... alongside multiple buttons and promotional advertisements.” Because the screen was cluttered, and the agreement language was not spatially located next to the corresponding button, Amazon was unable to enforce their terms in this case.

5. Meyer v. Uber Technologies, Inc.

When users registered for an Uber account, Uber notified users that “by creating an Uber account, you agree to the TERMS OF SERVICE & PRIVACY POLICY.” The court reasoned that in absence of actual notice (which is difficult to prove in these cases), users would be bound by the terms if “a reasonably prudent user would be on inquiry notice of the terms.” Whether such a reasonably prudent user is on inquiry notice of the terms depends on the conspicuousness of the screen design and content therein.

In this case, users were not required to explicitly agree to the terms by clicking a separate button or checking a box. But the court noted that the screen was uncluttered, the entire screen was visible at once, and the agreement language was spatially located to the corresponding button. As a result, the court found that the design of the screen afforded users reasonable notice of the terms and enforced Uber’s terms.

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