August 31, 2005
Illinois Court Enforces Dell’s Website Terms and Conditions of Sale
Dell Computers has contributed to the growing body of cases finding that “browse-wrap” contracts (terms and conditions posted on a website that do not necessarily require one to click on an “I agree” or “I accept” button) can be enforceable in certain circumstances.
In Hubbard v. Dell Corporation, No. 5-03-0643, 2005 WL 1968774 (Ill. App., Aug. 12, 2005), an Illinois appeals court held that buyers who purchased computers via Dell’s website were bound by an arbitration clause contained in the “Terms and Conditions of Sale,” even though buyers were not required to click on an “I agree” or “I accept” button specifically accepting those terms of sale.
A few thoughts about this case:
· The court properly used traditional contract analysis to evaluate whether or not the arbitration clause was enforceable. Like in the recent McDonald’s case in the Seventh Circuit, it’s nice to see the courts getting the analysis right.
· A few other cases have discussed the enforceability of “browse-wrap” terms. But this may be the first reported case where a court has held that a first time or infrequent visitor to a website could be bound by “browse-wrap” terms if they are conspicuous. In other cases, the parties were repeat visitors (generally for an improper purpose, such as stealing competitive data or screen scrapers).
· The court also considered the sophistication of the buyers. (“Common sense dictates that because the plaintiffs were purchasing computers on line, they were not novices when using computers. A person using a computer quickly learns that more information is available by clicking on a blue hyperlink.”).
· Several colleagues and I wrote a paper a few years ago entitled “Browse-wrap Agreements: Validity of Implied Assent in Electronic Form Agreements” (59 Business Lawyer 279 (2003)), in which we set forth a four-part test for courts to use in determining whether a user has validly assented to the terms of a browse-wrap agreement: (1) the user is provided with adequate notice of the existence of the proposed terms; (2) the user has a meaningful opportunity to review the terms; (3) the user is provided with adequate notice that the taking of a specified action manifests assent to the terms; and (4) the user takes the action specified in the notice.
While the Illinois court did not cite our article or explicitly use our test in the Hubbert decision, it was satisfied in this situation.
Adequate Notice of Terms. What constitutes adequate notice of the existence of terms should be judged both in terms of the physical presentation of the notice and the content of the notice. Here, each of the five pages of forms that the buyer had to fill out to make the purchase contained a blue hyperlink to the “Terms and Conditions Of Sale”. The terms and conditions of sale were also included on the printed invoice that came with the computer. In addition, on three of Dell’s five web pages that the buyers completed to make purchases, the following statement appeared: “All sales are subject to Dell’s Terms and Conditions Of Sale.” The court felt (properly, I think) that this statement would place a reasonable person on notice that there were terms and conditions attached to the purchase and it would be wise to find out what the terms and conditions were before making the purchase. Is this any different than signing an invoice or sales receipt with “See terms and conditions on reverse” printed at the bottom?
Opportunity to Review the Terms. The second factor of our test requires that the user of the website have a meaningful opportunity to review the browse-wrap terms before the deal becomes final. Here, the terms were linked to each of five pages that the buyer needed to complete before purchasing. The terms were available before the purchasing decision needed to be made. Moreover, the buyers had all the time that they wanted or needed to review the terms (unlike cases refusing to enforce terms on the back of ferry tickets where the ticket was taken immediately after purchase).
User Takes the Action Specified. Here, the users purchased the computers, thereby taking the action specified in he notice.
· In the end, using a click-through procedure provides more certainty and reliability when one needs to enforce a contract. This approach should be used whenever possible.
Discussion at ContractsProf Blog.
Posted by John Ottaviani at August 31, 2005 02:47 PM | Licensing/Contracts
I think the call to action, and its location, makes a big difference. In this case, having the language "order subject to T&Cs" in a prominent enough place puts users on a pretty strong inquiry notice. I agree that a stronger call to action would have made this point sharper, but on the surface this may have been the right outcome. Eric.
Posted by: Eric Goldman at September 2, 2005 04:05 PM