Illinois Court Enforces Dell’s Website Terms and Conditions of Sale

By John Ottaviani

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).

Adequate Notice of Action. Another element in our test is that the user must receive adequate notice that the taking of certain actions manifests assent to the terms. Here, the notice was not as clear as it could have been, but was adequate (according to the Court, and I agree) to put the buyer on notice that his or her purchase was subject to the terms. I would have preferred if the notice were more explicit such as “By completing this form or purchasing the computer, you agree to the ‘Terms and Conditions Of Sale’” (with a link to the terms and conditions). In other cases, courts have enforced terms that stated that by submitting a query, the user would be bound by the terms, or that use of the website is subject to express terms of use, and by continuing past the page, one agrees to abide by the terms. This case would seem to be closer to the latter.

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.

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