Online Terms can be Binding, even if You don’t have to Click!

This past December, a Missouri Court of Appeals held that a user was bound by a website’s terms and conditions, even though she was not obligated to click to signify assent to those terms (Major v. ServiceMagic, Inc.).

The court noted that where a user is obligated to click to signify agreement to terms, such “clickwrap” agreements are routinely enforced. Where clicking is not required, a site’s “browsewrap” agreement usually will be upheld if the user has actual or constructive knowledge of the terms and conditions before using the site.

On ServiceMagic’s site, next to each “Submit” button was a blue hyperlink to the site’s terms of use that stated “By submitting you agree to the Terms of Use”. The court held that the terms were sufficiently conspicuous to be enforced.

The court distinguished Specht v. Netscape Communications Corp. In that case, when Netscape allowed users to download certain software, a reference to license terms would have appeared only if the user scrolled further down the page. The U.S. Court of Appeals for the Second Circuit held that the terms would not be enforced because users (a) did not receive reasonable notice of the existence of the terms and (b) did not unambiguously assent to those terms. (Interesting side note: The opinion was written by then Circuit Judge, now Associate Justice of the Supreme Court, Sonia Sotomayor.)

Bottom line: If you want your site’s online terms to be enforced, requiring that the user click to denote acceptance is best, but providing notice of, and a link to, the terms can suffice.

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In Handy v. LogMeIn, Inc. , the U.S. District Court for the Eastern District of California provided a similar analysis with respect to a different issue. The court granted defendant’s Motion to Dismiss, holding that defendant’s posting on its website a statement that its app may be terminated constituted notice to the plaintiff that such termination was possible.

Related posts:

• Changing Online Terms of Use? Be Sure to Give Notice First!
• Hyperlink in Email Can Create Binding Terms

Dana H. Shultz, Attorney at Law  +1 510 547-0545  dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.