Because the interaction between online retailers and their customers is limited, online retailers have little choice but to present terms and conditions of sale on their websites. These online terms and conditions present concepts important to online retailers, including arbitration and choice of law provisions. The way in which online retailers present these terms and conditions to customers, and the way in which the customers manifest assent, is crucial to determining whether these terms and conditions are enforceable. Here are some key considerations in presenting online terms and conditions that may help to avoid court when you’re expected to be in arbitration under the law of your state.
Types of online contracts
There are generally two types of contracts formed on the internet between online retailers and customers: browsewrap and clickwrap agreements.
In a clickwrap agreement, the retailer website presents the customer with a message on his or her computer screen, requiring that the customer manifest assent to the terms of the agreement by clicking on an icon—generally labeled with “I accept” or similar language.
In a browsewrap agreement, the retailer website contains a statement that the customer agrees to be bound by the terms and conditions as a result of using the website.
Determining whether there is mutual assent to the terms of a contract is a fact specific inquiry, often dependent on individual state contract law. However, case law generally holds that a customer assents to the terms of the contract if the website makes it clear that clicking on an icon (e.g., “I accept” or “Purchase”) will communicate assent to the contractual terms, and those contractual terms are presented (either in full text, or via a link to a separate site containing the full text) in a clear and conspicuous manner.
But, if users are not required to affirmatively manifest assent to the terms of the contract through clicking on an icon designating acceptance of the terms, or if the terms and conditions are not presented in a conspicuous manner (e.g., through a hyperlink at the very bottom of a webpage which would not be viewable by the user in making a purchase on the websites) courts have been reluctant to find that the user manifested assent to the contractual terms.
These browsewrap agreements have come into play in several recent cases in which large online retailers sought to dismiss proposed class actions based on arbitration provisions in website terms and conditions. Online retailers have been successful in some instances, but not in others, depending upon case-specific inquiries into how customers assented to the terms and how the terms were presented.
Clickwraps are the safest bet
Online retailers not wishing to roll the dice with a judge should consider requiring customer assent to terms and conditions with a clickable icon, and the icon should make it clear that by clicking, the customer is affirming that he or she agrees to be bound by those terms. Online retailers should also ensure that the terms are made available in a clear and conspicuous way, for example, by providing a link to those terms above the clickable icon in a color and size that stands out from the background of the website.