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…
As the eastern part of the United States picks up the pieces from the devastating Hurricane Sandy, many companies are experiencing a classic “force majeure” event. The circumstances remind us of a blog post we wrote shortly after Irene blew our way last year, and we thought it might be…
In an important opinion on the enforceability of online contract terms, Senior Circuit Judge Robert D. Sack walks through the last decade and a half of online contracting law on the way to invalidating an arbitration provision in an agreement involving a so-called Web loyalty program. Judge Sack concluded in…
In this era of multiple online communication channels, and in an environment of increased employee mobility, employers need to focus on the legal and practical ways of securing their ownership of online company accounts that are registered or otherwise created by employees or contractors. In the three cases discussed below,…
The dispute between The SCO Group and Novell, Inc. over the ownership of copyrights in the code to certain versions of the UNIX operating system, which started eight years ago, appears to have been handed its retirement papers by the Tenth Circuit. Yesterday, on the case’s second visit to the…
Update: A little over a year after Hurricane Irene blew through, Hurricane Sandy dealt a devastating blow to the Eastern Seaboard. And our advice remains the same: review of force majeure clauses is in order, first to assess their implications for the current crisis, and for the long term, to…
In what may represent a new wave in an interesting challenge to the viral nature of social media marketing, a recently filed putative class action asserts a right of publicity claim against Facebook in connection with the service’s “Like” and “Friend Finder” features.
J.N. v. Facebook, Inc., No. 11-cv-2128 (E.D.N.Y.)…
Since the Seventh Circuit opinion in ProCD v. Zeidenberg (7th Cir. 1996), judicial analysis of standard form contracts has proceeded along lines that have, in general, been more favorable to the efforts of sellers and licensors seeking to enforce the provisions of “agreement now, terms later” contracts. The ProCD v. Zeidenberg analysis of the relevant UCC provisions endorsed the enforceability of additional terms included in shrinkwrap and mail order “in the box” contracts on the theory that a purchaser or licensee who disagreed with the later-presented terms could reject the terms and avoid contract formation by returning the goods.
Over time, the ProCD v. Zeidenberg approach to later-presented terms has become the majority view. But just because a court adopts the ProCD v. Zeidenberg analysis, it will not necessarily find that a “terms later” contract is enforceable. That was the case in Defontes v. Dell, decided on December 10 by the Rhode Island Supreme Court.
Can the submission of user-generated content pursuant to an invitation posted on a Web site give rise to implied contractual obligations on behalf of the Web site owner? Although the recent case of Thome v. The Alexander & Louisa Calder Foundation, 2009 NY Slip. Op., 2009 N.Y. App. Civ. LEXIS 8707 (N.Y. App. Div. 1st Dept. Dec. 1, 2009) does not specifically address user-generated content and rather involves the submission of an art work for authentication by an artist’s foundation , the opinion in close enough to be of interest to parties that accept user-generated submissions via a Web site.
When Cynthia Hines returned a vacuum cleaner to online retailer Overstock.com, she was reimbursed for the full amount of her purchase, but Overstock deducted a $30 restocking fee, citing a provision in its Web site Terms and Conditions. Hines filed a purported class action in federal court in the Eastern District of New York asserting that she had been advised that she could return the vacuum without incurring any charge, and that she was not aware that a restocking fee would be charged.
When Overstock moved to dismiss or stay the action, citing the arbitration provision in the same Terms and Conditions, Hines similarly argued that she was not aware of the arbitration provision. According to Hines, she was not on either actual or constructive notice of the Terms and Conditions because they were referenced only in a hyperlink in small type at the bottom of the page of the Overstock Web site, between the link to the privacy policy and the Overstock.com registered trademark. She argued: "I did not scroll down to the end of the page(s) because it was not necessary to do so, as I was directed each step of the way to click on to a bar to take me to the next step to complete the purchase."
In Hines v. Overstock.com, Inc., 2009 U.S. Dist. LEXIS 81204 (E.D. N.Y. Sept. 4, 2009), Judge Sterling Johnson, Jr., agreed with Hines, finding that under the law of New York (where Hines resides), or under the law of Utah (where Overstock.com is located), Overstock.com had not carried its burden of providing the existence of a valid arbitration agreement. There was no meeting of the minds sufficient to form a contract, Judge Johnson ruled, because Hines had neither actual nor constructive notice of the Terms and Conditions, as required by the Second Circuit ruling in Specht v. Netscape Communications Corp., 306 F.3d 17 (2d Cir. 2002):
Notably, unlike in other cases where courts have upheld browsewrap agreements, the notice that "Entering this Site will constitute your acceptance of these Terms and Conditions," … was only available within the Terms and Conditions. Hines therefore lacked notice of the Terms and Conditions because the website did not prompt her to review the Terms and Conditions and because the link to the Terms and Conditions was not prominently displayed so as to provide reasonable notice of the Terms and conditions. Very little is required to form a contract nowadays – but this alone does not suffice."
Compare the result in Hines v. Overstock.com with the result in another recent ruling, PDC Laboratories, Inc. v. Hach Co., 2009 U.S. Dist. LEXIS 75378 (C.D. Ill. Aug. 25, 2009), a case involving a transaction between commercial parties. The court ruled that the incorporation of a limitation of damages clause in terms and conditions of sale available via a hyperlink displayed during an online ordering process was not procedurally unconscionable. Relying on Hubbert v. Dell Corp., 359 Ill. App. 3D 976, 835 N.E. 2D 113 (5th Dist. 2005), an opinion involving a consumer transaction, the court concluded that the terms and conditions were conspicuous within the meaning of the Uniform Commercial Code where the hyperlink leading to them was in underlined, blue, contrasting text and was displayed three times during the ordering process. The court further noted that attention was specifically brought to the terms and conditions by a reference in the directions for the "final order step" of the ordering process.
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