Browsewrap Terms Not Enforceable Without Express Consent

Browsewrap Terms Not Enforceable Without Express Consent

Last month, the U.S. Court of Appeals for the Ninth Circuit ruled that in the absence of a prompt that requests users to affirmatively acknowledge the Terms of Use, a website’s practice of making terms of use available via conspicuous hyperlinks is insufficient to provide notice to users of the actual terms of use.

The case is Nguyen v. Barnes & Noble Inc. and the decision effectively signals the end in the Ninth Circuit for enforcing “browsewrap” terms of use against purchasers based merely on their use of a website without evidence that they were prompted to assent to the terms.  While it is true that failure to read a contract does not excuse a party of its contractual obligations, the burden first must be on website operators to at least put users on notice of the terms in the contract.

Consumers cannot be expected “to ferret out hyperlinks” to contractual terms, the court added, especially in light of the wide range of technical skills among the universe of online buyers.

In Nguyen, the plaintiff initiated a false advertising and deceptive business practices class action arising from his attempt to purchase an HP “Touchpad” over barnesandnoble.com while the company was offering steep discounts during liquidation of Touchpad inventory. The website confirmed plaintiff’s transaction, however, the next day it e-mailed him saying the order had been canceled due to unexpectedly high demand.

Plaintiff alleged that the delayed cancellation notice resulted in him losing out on the opportunity to purchase a discounted Touchpad as the product was being phased out.  The action was removed to federal court and Barnes & Nobel moved to compel arbitration pursuant to an arbitration provision in its website terms of use.

The website had a conspicuous “Terms of Use” link at the bottom of each page.  Plaintiff argued that he had no notice of the arbitration provision and had not expressly agreed to it.  The district court ultimately ruled that the website did not provide reasonable notice of the terms and that the plaintiff never unambiguously agree to the arbitration provision.  The Ninth Circuit affirmed.

Unlike a “clickwrap” online agreement, where a user must click an “I agree” button in order to complete a transaction after being presented with the terms, a “browsewrap” agreement does not require such a manifestation of assent.  Where the link to a “browsewrap” website’s terms of use is buried away where it is unlikely to be noticed, courts have refused to enforce them.  Specht v. Netscape Commc’ns Corp., 306 F.3d 17, 23 (2d Cir. 2002).

Where a website has an explicit text notice that continued use will signify the users agreement to be bound, however, some courts have been more accepting of “browsewrap” agreements.  Here, the Ninth Circuit noted a “traditional reluctance” to enforce “browsewrap” agreements against individual consumers.

In short, the court said that the conspicuousness and placement of the hyperlink, the website’s general design, and any other notices to users about the terms of use, “all contribute to whether a reasonably prudent user would have inquiry notice of a ‘browsewrap agreement.’”

Contact a terms and conditions lawyer to discuss maximizing the likelihood of the enforceability of your website agreements.  Always provide clear and conspicuous notice of all terms and privacy practices.  Require parties to expressly and unequivocally manifest assent prior to use of the relevant services.

If it is not practical to obtain consent prior to accessing the website material, reasonably ensure that the terms and conditions are prominently placed on the website so that a user will have notice of the actual terms and that the website is subject to them.  Website terms and conditions that are only available via an inconspicuous hyperlink in mouseprint are likely not  unenforceable.

Richard B. Newman is an Internet Marketing Compliance and Regulatory Defense Attorney at Hinch Newman LLP focusing on advertising and digital media matters. His practice includes conducting legal compliance reviews of advertising campaigns, representing clients in investigations and enforcement actions brought by the Federal Trade Commission and state Attorneys General, commercial litigation, advising clients on promotional marketing programs, and negotiating and drafting legal agreements.

Information conveyed in this article is provided for informational purposes only and does not constitute, nor should it be relied upon, as legal advice. No person should act or rely on any information in this article without seeking the advice of an attorney.