Many commercial websites rely on “browsewrap” agreements to bind visitors to commercial terms. A recent decision by the Ninth Circuit suggests that a review of how those terms are presented may be in order to ensure enforceability.

A browsewrap agreement is a set of terms which is accessible via a hyperlink located on the pages of a website.  The user does not have to view those terms and does not have to click on a button to agree to the terms expressly, and instead presumably gives his or her assent simply by using the website.

Courts have generally evaluated the validity of browsewrap agreements based on whether the user had actual or constructive knowledge of a website’s terms and conditions and whether the user manifested assent to those terms.

In a significant decision, the Ninth Circuit found that the presentation of a browsewrap agreement on a popular consumer e-commerce site provided insufficient notice of that site’s terms of use, and therefore were not enforceable against a user of the site.  See Nguyen v. Barnes & Noble Inc., 2014 WL 4056549 (9th Cir. Aug. 18, 2014).

In the Nguyen case, the plaintiff attempted to purchase a discontinued tablet computer that was offered at a steep discount on the Barnes & Noble (“B&N”) website, but, after completing the transaction, B&N cancelled the order due to unexpectedly high demand.  The plaintiff, on behalf of a putative class, brought deceptive practices and false advertising claims under state law, alleging that he suffered damages because he could not obtain the tablet at the discounted price and was forced to purchase a similar product at a higher price.

B&N moved to compel arbitration, arguing that plaintiff was bound by the arbitration agreement in the website’s terms of use, which were available via a conspicuous hyperlink on every page of the B&N website and stated, in part, that: “By visiting any area on the Barnes & Site, creating an account, making a purchase via the Barnes & Site . . . a User is deemed to have accepted the Terms of Use.”  The retailer contended that the placement of the “Terms of Use” hyperlink on its website put the plaintiff on constructive notice of the arbitration agreement and that such notice, combined with the plaintiff’s subsequent use of the website, was enough to bind him to the browsewrap agreement.  [It should be noted that no link to the terms of use, nor reference to them, was presented to the consumer as part of the online transaction].

The lower court disagreed, finding that B&N failed to provide reasonable notice of its terms of use and that the plaintiff did not affirmatively assent to the arbitration clause contained within the terms. Nguyen v. Barnes & Noble, Inc., 2012 WL 3711081 (C.D. Cal. Aug. 28, 2012). The Ninth Circuit affirmed.

The appeals court stated that, particularly in the case of individual consumers, whether a user has inquiry notice of a browsewrap agreement depends on the design and content of the website and the agreement’s webpage, noting that where the link to a website’s terms of use is buried at the bottom of the page or tucked away in obscure corners of the website, courts have refused to enforce such an agreement.  “On the other hand”, the court noted, “where the website contains an explicit textual notice that continued use will act as a manifestation of the user’s intent to be bound, courts have been more amenable to enforcing browsewrap agreements.”

It seems that B&N made it halfway to the finish line of enforceability, but no more.  The court noted:

[I]n keeping with courts’ traditional reluctance to enforce browsewrap agreements against individual consumers, we therefore hold that where a website makes its terms of use available via a conspicuous hyperlink on every page of the website but otherwise provides no notice to users nor prompts them to take any affirmative action to demonstrate assent, even close proximity of the hyperlink to relevant buttons users must click on—without more – is insufficient to give rise to constructive notice.

While the link to its terms were placed on the bottom-left corner of every page in somewhat close proximity to the buttons a user must click on to complete an online purchase, and were positioned on the same screen so a user would not have to scroll down to click the link, it still wasn’t enough for the Ninth Circuit to find an enforceable agreement.

Many website publishers rely on the enforceability of browsewrap agreements. The Nguyen decision suggests that a review be taken to ensure that the presentation of those agreements comport with the Ninth Circuit’s view on web design.