Ninth Circuit Opinion Confirms That Websites Should Probably Have Clickwrap Agreements To Bind Their Customers

Written by Keenan W. Ng

Recently, the Ninth Circuit in Nguyen v. Barnes &Noble, Inc. held 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.”

In 2011, plaintiff purchased two Hewlett-Packard Touchpads from the Barnes & Noble website during a fire sale.  Unfortunately, despite receiving a confirming email of his purchase, plaintiff’s order was cancelled due to high demand.  Plaintiff filed suit alleging he had to purchase another tablet at a higher price.  Defendant argued that plaintiff must arbitrate the matter per the browsewrap terms of use agreement. 

The issue in the case was whether plaintiff was compelled to arbitrate as per the terms of use agreement that was a “browsewrap” agreement found on the Barnes & Noble webpage plaintiff used to purchase the Touchpad. A browsewrap agreement exists where a website’s terms and conditions of use are generally posted on the website via a hyperlink at the bottom of the screen.  (In contrast, a “clickwrap” agreement exists where website users are required to click on an “I agree” box after being presented with a list of terms and conditions of use.)

Plaintiff argued because he did not view the browsewrap agreement, he should not be held to it.  The court noted that browsewrap agreements are enforced where the user has actual notice of the agreement.  Register.com, Inc. v. Verio, Inc., 356 F.3d 393, 401- 404 (2d Cir. 2004).  In situations where the user does not have knowledge of the agreement, the validity of the browsewrap agreement turns on whether the website places a reasonably prudent user on inquiry notice of the terms of the contract.  Specht v. Netscape Commc’ns Corp., 306 F.3d 17, 30-31 (2d Cir. 2002).  Inquiry notice depends on the design and content of the website and the agreement’s webpage.  Be In, Inc. v. Google Inc., No. 12-CV-03373-LHK, 2013 WL5568706, at *6 (N.D. Cal. Oct. 9, 2013).  That the agreement was an arbitration agreement was not relevant to the Court’s analysis.    

Barnes & Noble argued that the placement of the “Terms of Use” hyperlink in the bottom left-hand corner of every page on the Barnes & Noble website, and its close proximity to the buttons a user must click on to complete an online purchase, is enough to place a reasonably prudent user on constructive notice.  The Ninth Circuit stated the placement of the hyperlink was not enough to provide constructive notice, as there exists no authority supporting that position as well as the court’s reluctance to enforce browsewrap agreements against individual consumers.  The Court further noted that failure to read a contract before agreeing to its terms does not relieve a party of its obligations under the contract, Gillman v. Chase Manhattan Bank, N.A., 73 N.Y.2d 1, 11 (1988).  In light of this lack of authority, the Ninth Circuit held the plaintiff had insufficient notice of Barnes & Noble’s Terms of Use, and thus did not enter into an agreement with Barnes & Noble to arbitrate his claims. 

In summary, as a website owner, if you wish to bind your users to your use of terms, we suggest ensuring your users affirmatively acknowledge acceptance of your terms by using a clickwrap agreement.