Notice and Assent: Electronic Bargaining in California

March 24, 2016

The recent ruling in Brett Long v. Provide Commerce, Inc. (2016) is remarkable in that it is the first California appellate opinion to robustly discuss the formation of electronic contracts under state law.  The court looked for guidance solely in the federal appeals court decisions in Specht v. Netscape Comm. Corp. (2d Cir. 2002) 306 F.3d 17, 30 (Specht) and Nguyen v. Barnes & Noble Inc. (9th Cir. 2014) 763 F.3d 1171, 1175 (Nguyen) to answer the issues raised by the case. It then used both cases as support for refusing to hold plaintiff to the arbitration provision found in the online Terms of Use found on defendant’s website.

 

Plaintiff Brett Long purchased a floral arrangement on defendant Provide Commerce’s retail website, an arrangement that he claims was advertised as a completed assembled product. When the product was delivered, it was instead a do-it-yourself kit in a box requiring assembly by the purchaser. Long sued Provide Commerce for making misrepresentations to consumers.

 

Defendant moved to compel arbitration claiming that plaintiff had agreed to its website terms of use and that those terms included an agreement to arbitrate all disputes relating to its websites.

After discussing both Specht and Nguyen, the court found that in order for an internet website user to be bound by the terms of an electronically-formed agreement, the user must be given reasonably conspicuous notice of the existence of the terms of the agreement AND must manifest unambiguous assent to those terms. As reasoned in Nguyen, a conspicuously designed and placed Terms of Use hyperlink button is not enough to establish a contract with website users. The website design must include “something more” to capture the user’s attention and secure his assent. According to the court, typically that “something more” takes the form of a textual notice warning users to review the Terms of Use or telling users that, by clicking a button, he is agreeing to the Terms of Use.

 

In the case at hand, the court first found that defendant’s Terms of Use hyperlink button was not conspicuously presented to visitors to its website.  Indeed, it was embedded within too many other notices and textual clutter.  The court need not have gone any further after finding that the plaintiff was not on notice of the terms, but the court did go on to say that even if plaintiff had been given conspicuous notice of the existence of the Terms of Use, defendant had not required him to take the extra step of actually manifesting agreement with those terms. The website workflow had not included any mechanism by which it captured unambiguous acceptance of  the terms. Through a physical act of clicking or otherwise.

 

In this case, the California Appellate Court has adopted the reasoning in Nguyen and has, perhaps, killed off “pure browsewrap” terms as an effective contracting approach.

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