Contract Drafting Concerns: Beware Browsewrap

By: Timothy Murray, MURRAY, HOGUE AND LANNIS

With the e-commerce explosion, sellers are peddling goods and services over their websites at unprecedented rates. From a contract law perspective, this ought to be a seller’s nirvana: the seller alone establishes the legal terms to govern transactions conducted over its website without any haggling or negotiating, and without any battle of the forms in which a transaction is subject to the buyer’s competing boilerplate.

BUT IN AN ALARMING NUMBER OF CASES, THE TERMS OF USE drafted to govern website transactions are held to be outright unenforceable due to the most basic failure imaginable: there’s no mutual assent.

In the brave new world of Internet contracts, mutual assent isn’t a fossil from first-year contract law class with no relevance to the real world; it’s the rock star of contract jurisprudence. The failure to make sure the buyer assents to the website’s terms of use is perhaps the ultimate contract drafting landmine about which every commercial lawyer ought to be aware.

The Problem: Browsewrap

There are two main types of Internet contracts, with all manner of variations in between: clickwrap and browsewrap. Clickwrap agreements require users to expressly manifest assent (by clicking a button) to the website’s terms of use before being allowed to conclude a transaction or continue using the site. From a contract law perspective, there is little controversy surrounding clickwrap agreements. They are akin to signing a traditional pen and ink contract.

The problem lies with browsewrap-type agreements, in which contractual terms of use are hyperlinked and presented on aseparate page of the website, and the user is not required to click a button to manifest his or her assent. The user’s assent is inferred from his or her use of the website. Browsewrap-hyperlinked terms are frequently held to be unenforceable, but they will be enforced if the user (1) has actual or constructive notice of them and (2) manifests assent to them.

• Actual notice. If the user has actual knowledge of browsewrap terms (typically demonstrated by circumstantial evidence as opposed to the user’s admission that he or she has read them), the terms will be enforced. Since the terms will almost always favor the website owner, if the terms would not otherwise be enforceable, a user will be punished for reading and admitting to having read the contract—a peculiar state of affairs that might be worthy of a policy debate.
• Constructive notice.The law generally does not hold the Internet user to any duty to go searching for a hyperlink to a website’s terms of use. But even if a user does not have actual notice of the hyperlinked terms, he or she will be deemed to have constructive notice of them if the content and design of the website puts a reasonably prudent user on inquiry notice that the hyperlinked terms govern transactions involving that website.

Note a common problem: it is not enough that the hyperlinked terms themselves explicitly state that the terms govern use of the website. If the website that hyperlinks to the terms fails to alert a reasonable user that the terms govern, there is no reason for a user to visit the terms, and they won’t be enforced.¹

A. The hyperlink must be conspicuous. To show that a browsewrap agreement is enforceable, it is essential to prove that the hyperlink was conspicuous on the web page. To assess conspicuousness, courts examine a variety of factors, including size, color, typeface, and placement—and these factors must be viewed in the context of the web page’s overall design.² That last point is crucial: it is not enough for a hyperlink to be in large font if the web page is chock-full of other hyperlinks in equal or larger font (because if everything is conspicuous, nothing is).

• Classic inconspicuousness. If the hyperlink is relegated to the bottom of the web page in inconspicuous font, and if there is no reason for the user to see it, courts will find the hyperlinked terms unenforceable. A common mistake is to put the hyperlink below the order button where there is no reason for a user to continue to scroll down to it.³ Inconspicuous because of clutter. If the hyperlink is just one item on a web page filled with all manner of other links and information, courts likely will hold it’s not conspicuous—at the very least, it raises a fact issue as to whether the hyperlinked terms are enforceable. A hyperlink that might otherwise be conspicuous on a less cluttered page is rendered inconspicuous when there is too much on the page competing with the user’s attention.⁴
• Bottom line.The hyperlink has to stand out—and it has to be very close to the button that the user will click in order to proceed to use the site or to conclude a transaction.

B. Website must alert user that continued use will manifest assent to hyperlinked terms. Conspicuousness and the placement of the hyperlink are not enough. The web page also needs to contain an explicit notice that continued use of the website will manifest the user’s assent to be bound by the hyperlinked terms. Merely including a Terms of Use hyperlink near the relevant button a user must click to proceed is not enough—it does not tell the user that the hyperlinked terms will be binding if he or she proceeds. The website must alert the user to review the terms, or otherwise admonish him or her that by clicking a button to complete a transaction “you agree to the terms and conditions”—or words to that effect.⁵ The more explicit, the better.

The Lessons

In one of the cases that held a browsewrap agreement unenforceable due to the absence of mutual assent, the court wrote this stinging indictment: “Very little is required to form a contract nowadays—but this alone does not suffice.”⁶ Yet, the absence of mutual assent with respect to browsewrap agreements is a problem that afflicts even sophisticated companies that are synonymous with Internet sales. The client needs to be made aware that it isn’t just the terms of use themselves that have contractual significance—the websites that hyperlink to them do, too. In short, attorneys need to be directly involved in decisions about the design and content of websites that hyperlink to terms of use. The best set of terms in the world can’t create a binding contract when the website that hyperlinks to them doesn’t require users’ assent. A Timothy Murray is the coauthor of the Corbin on Contracts Desk Edition (2017) and the biannual supplements to Corbin on Contracts. He practices law as a partner in Murray, Hogue & Lannis in Pittsburgh, Pennsylvania, where he has represented all manner of clients in business disputes and transactional matters.

1. Nguyen v. Barnes & Noble Inc., 763 F.3d 1171 (9th Cir. 2014); Herman v. SeaWorld Parks & Entm’t, Inc., 2016 U.S. Dist. LEXIS 181173 (M.D. Fla. Aug. 26, 2016); Hines v. Overstock.com, Inc., 668 F. Supp. 2d 362 (E.D.N.Y. 2009). 2. Be In v. Google, Inc., 2013 U. S. Dist. LEXIS 147047 (N.D. Cal. 2013); Long v. Provide Commerce, Inc., 200 Cal. Rptr. 3d 117, 125–126 (Cal. App. 2d Dist. 2016). See also, Metter v. Uber Techs., Inc., 2017 U.S. Dist. LEXIS 58481 (N.D. Cal. 2017). 3. Specht v. Netscape Communs. Corp., 306 F.3d 17 (2d Cir. N.Y. 2002); Herman v. SeaWorld Parks & Entm’t, Inc., 2016 U.S. Dist. LEXIS 181173 (M.D. Fla. Aug. 26, 2016); Hines v. Overstock.com, Inc., 668 F. Supp. 2d 362 (E.D.N.Y. 2009). See also, Metter v. Uber Techs., Inc., 2017 U.S. Dist. LEXIS 58481 (N.D. Cal. 2017) (alert about terms of use blocked by keypad so user could enter payment information). 4. Nicosia v. Amazon, 2016 U.S. App. LEXIS 15656 (2d Cir. 2016) (webpage had multiple buttons and promotional advertisements—between 15 to 25 different links and various text in four font sizes and six different colors—and commercial notices that distracted from the legal terms); Meyer v. Kalanick, 2016 U.S. Dist. LEXIS 99921, at *31 (S.D.N.Y. July 29, 2016) ("[I]t is hard to escape the inference that the creators of Uber’s registration screen hoped that the eye would be drawn seamlessly to the credit card information and register buttons instead of being distracted by the formalities” of the Terms of Service hyperlink.). See also, Nghiem v. ***’s Sporting Goods, Inc., 2016 U.S. Dist. LEXIS 89429 (C.D. Cal. July 5, 2016). 5. Nguyen v. Barnes & Noble Inc., 763 F.3d 1171 (9th Cir. 2014). See also, Nghiem v. ***’s Sporting Goods, Inc., 2016 U.S. Dist. LEXIS 89429 (C.D. Cal. July 5, 2016).

Timothy Murray is the coauthor of the Corbin on Contracts Desk Edition (2017) and the biannual supplements to Corbin on Contracts. He practices law as a partner in Murray, Hogue & Lannis in Pittsburgh, Pennsylvania, where he has represented all manner of clients in business disputes and transactional matters.

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