Obtaining Assent in Today's e-Conomy

Introduction

The ability to purchase goods and services via the Internet has afforded individuals and businesses alike countless opportunities to make purchases from vendors around the globe in a matter of seconds. To minimize interruptions in the purchase process, online vendors strive to integrate the presentation and acceptance of contractual terms so as to avoid distracting the user from completing the transaction. Although the distinction is not always clear, contracts formed
in this manner typically fall into one of two categories: “clickwrap agreements”
and “browsewrap agreements.” While some courts have found both types of agreements to be enforceable, clickwrap agreements are more routinely enforced than browsewrap agreements.

Clickwrap Agreements

A clickwrap agreement is created when an individual, typically while browsing a Web site or installing software, is presented with the vendor's contractual terms and prompted to undertake some affirmative action that evidences a manifestation of assent to those terms.

The manifestation of assent usually occurs when the visitor “clicks” his or her computer mouse to activate an icon stating that the visitor agrees to be bound by the terms of the agreement.

On a more general level, the term “clickwrap” refers broadly to any agreement where the offeree is given the opportunity to accept its terms by doing some affirmative act on a computer.

To determine whether a clickwrap agreement is enforceable, courts apply traditional principles of contract law and focus on whether the offeree had reasonable notice of, and manifested assent to, the agreement's terms. Thus, when the terms are conspicuously presented to the offeree, courts typically will find the clickwrap agreement enforceable, provided the offeree manifested consent.

In the context of online consumer transactions, a Web site may condition the user's acceptance of a clickwrap agreement as a prerequisite to completing an online purchase. In other instances, the Web site may require an affirmative act manifesting assent to the agreement as a prerequisite to navigating beyond the Web site's home page. Regarding software installation, the offeree's acceptance of the agreement is typically a requirement to his or her ability to install the software. Thus, if the user refuses to accept the agreement, the software installation will automatically be cancelled.

A key factor in the creation of a clickwrap agreement is the nature of the action deemed to manifest the offeree's acceptance. While some agreements require the offeree to perform a deliberate affirmative act in order to assent to the terms of the agreement, other agreements condition assent on conduct that is more subtle. In the latter scenario, courts may hesitate to enforce the agreement out of concern that the offeree did not receive sufficient notice of, and a fair opportunity to review, its terms. Thus, the critical inquiries for enforcement in most cases are: 1) whether the offeree had sufficient notice of and opportunity to review the agreement's terms; and 2) whether the conduct deemed to evidence assent to the agreement clearly establishes the offeree's knowing acceptance of the agreement's terms.

Browsewrap Agreements

Browsewrap agreements are similar to clickwrap agreements with the key exception that browsewrap agreements do not require the user to take any affirmative action specifically manifesting assent to the terms and conditions. Rather, users are deemed to have assented to browsewrap agreements by virtue of their mere use or “browsing” of the Web site containing the terms and conditions.

In the typical case, a browsewrap agreement is presented at the bottom of the Web site and informs the user that acceptance will occur upon the offeree's use of the site. Thus, courts considering browsewrap agreements usually hold that their validity turns on whether the user had actual or constructive knowledge of its terms prior to doing the act that purportedly manifests assent to those terms. Parties seeking to enforce a browsewrap agreement typically offer evidence that the user:

• Visited, or accessed, the Web site;
• Was put on notice, or should have been on notice, of the agreement and its terms, as well as that any continued use of the Web site would constitute assent to the agreement; and
• Continued using or browsing the Web site. Most Web sites that use a browsewrap agreement provide a hyperlink at the bottom of the Web page that directs the offeree to the agreement's terms. Others simply state at the bottom of the page that the Web site is subject to certain terms of use, followed by instructions on how the user can access them.

Courts are generally willing to enforce browsewrap agreements, provided:

• The Web site or software provides sufficient notice to fairly apprise the user that use (or continued use) of the Web site or software is governed by terms and conditions, and that any use (or continued use) of the Web site or software constitutes acceptance thereof; and
• The user is afforded a full opportunity to review the terms.

Not surprisingly, the more conspicuous the notice and opportunity to review the terms, the more likely a court will enforce those terms.

A few courts have gone further in enforcing browsewrap agreements, reasoning that the proliferation of online transactions with associated electronic terms and conditions has made it unreasonable for a purchaser to claim he or she was unaware the transaction was governed by additional terms. Accordingly, those courts held the purchaser was bound by the terms despite evidence that the user had neither actual nor constructive notice of the agreement. In such cases, the holding is often based in part on the particular purchaser's substantial familiarity and experience with online transactions.

Nevertheless, and in accordance with the application of normal contract principles, courts have been more hesitant to enforce browsewrap agreements than clickwrap agreements. This hesitation has resulted in seemingly conflicting opinions, making it difficult to extract bright line rules for the enforceability of a browsewrap agreement.

Clickwrap Agreement: Methods Of Manifesting Assent

Even though they are electronic, clickwrap agreements are considered to be writings because they are printable and storable. See, e.g., In re RealNetworks, Inc., Privacy Litigation, No. 00-c-1366, 2000 U.S. Dist. LEXIS 6584, 8-11, 2000 WL 631341, 3-4 (N.D. Ill. May 11, 2000). Thus, in determining whether clickwrap agreements are enforceable, courts apply traditional principles of contract law and focus on: 1) whether the user had reasonable notice of the agreement and its terms; and 2) whether the user manifested assent to the agreement. Clickwrap agreements are most likely to be enforced where they provide clear notice of their terms and require an unmistakable manifestation of assent from the user.

Typing Words of Assent

The most readily enforced clickwrap agreements are those that require the user to assent to their terms by typing a pre-designated word or phrase of affirmation, such as “I AGREE” or “AGREE,” before any transaction can proceed. In CompuServe, Inc. v. Patterson, 89 F.3d 1257 (6th Cir. 1996), one of the first published cases to address clickwrap agreements, the Sixth Circuit found such an agreement valid and enforceable. The CompuServe court held the defendant manifested consent when he typed “AGREE” into a form contained with an online software registration agreement. The defendant's execution of that agreement, which contained an Ohio choice of law provision and was with an Ohio-based company, was a key factor in the court's ruling that he was subject to personal jurisdiction in Ohio.

Although this method leaves no doubt as to the user's notice of the agreement, it is also more distracting than other methods and might be viewed as interrupting the purchase process. Thus, unless the transaction is of particular import, Web sites typically employ less intrusive methods for evidencing the user's assent.

Clicking Boxes or Other Objects to Signify Assent

The most common method utilized in a significant number of online transactions is the clicking of a box or other object to signify the user's assent to the terms and conditions prior to completing the transaction. The button is usually accompanied by a sentence stating, “By clicking 'Agree' you acknowledge that you have read, understand and agree to be bound by the terms and service.” Courts routinely enforce agreements created in this manner, particularly if the actual terms and conditions are displayed directly above the button. See, e.g., Forrest v. Verizon Comms., Inc., 805 A.2d 1007, 1010-11 (D.C. Ct. App. 2002) (fact that “scroll box” in electronic version of agreement displays only part of the agreement at one time does not preclude finding of adequate notice). Further, at least one court has held that it is not necessary to require the user to scroll all the way through the agreement's terms before he or she is allowed to accept. Realpage, Inc. v. EPS, Inc., 560 F. Supp. 2d 539, 545 (E.D. Tex. 2007).

Another commonly used and enforced method is to provide a hyperlink to the terms and conditions directly above the “I Agree” button. See, e.g., Guadagno v. E*Trade Bank, 592 F. Supp. 2d 1263, 1267 (C.D. Cal. 2008) (text next to check box on Web page provided hyperlink to terms and stated “By checking this box, you acknowledge that you have reviewed ' Agreement '.”); DeJohn v. The .TV Corp. Int'l, 245 F. Supp. 2d 913, 915-16 (N.D. Ill. 2003) (same). This method avoids cluttering the purchase process by making the agreement's terms available via a hyperlink, as opposed to reproducing them on the Web page. At least some courts have rejected claims of lack of notice where the language above the “I Agree” button unambiguously notifies the user that the pending transaction is subject to terms and conditions and they can be accessed via a hyperlink. See, e.g., DeJohn, 245 F. Supp. 2d at 919 (fact that user did not read the terms via hyperlink “is irrelevant because absent fraud ', failure to read a contract is not a get out of jail free card”); Forrest, 805 A.2d at 1010 (“The general rule is that absent fraud or mistake, one who signs a contract is bound by a contract which he has an opportunity to read whether he does so or not”).

Require Assent for Transaction

Whatever the method for demonstrating assent, the user should not be allowed to complete the transaction without taking the necessary action to show assent. Where a transaction is structured in this manner, courts regularly have enforced the clickwrap agreement even where the user claimed not to remember accepting the agreement. See, e.g., ESL Worldwide.com, Inc. v. Interland, Inc., No. 06-CV-2503(LBS), 2006 WL 1716881, 2 (S.D.N.Y. June 21, 2006) (evidence that user accessed parts of Web site that he could not have accessed without first clicking the “Accept” box overcame user's claim that he did not remember doing so). Courts also have relied on evidence that a consumer's user account or e-mail address was associated with a transaction to establish that the consumer assented to the Web site's terms. See, e.g., Burcham v. Expedia, Inc., No. 4:07CV1963 CDP, 2009 WL 586513 (E.D. Mo. Mar. 6, 2009) (evidence that plaintiff's e-mail address was linked to user account created on travel site and plaintiff received receipt for travel purchase at that e-mail address overcame plaintiff's claim that he had no recollection of viewing terms or that someone else had assented to the terms without his knowledge).

On the other hand, where the user is able to complete the transaction without first manifesting consent, there is a stronger argument that the user knowingly rejected the terms but was allowed to complete the transaction anyway. At least one court has rejected this argument on the theory that an offeree who accepts a benefit with knowledge of its terms is deemed to have accepted those terms. See, Register.com, Inc. v. Verio, Inc., 356 F.3d 393, 403 (2d Cir. 2004) (where the choice is to take the offer on its known terms or not take the offer, taking the offer constitutes acceptance of those terms).

Other Actions Intended to Signify Assent

Another type of clickwrap agreement makes acceptance of its terms part of the process of the transaction itself. For example, a Web site that sells software downloads may include a statement above the “Download” button that provides a hyperlink to the terms and conditions and states: “By clicking the 'Download' button below, you agree to the terms and conditions.” See, e.g., Druyan v. Jagger, 508 F. Supp. 2d 228, 237 (S.D.N.Y. 2007) (finding a clickwrap agreement enforceable where it stated: “By clicking on the 'Look for Tickets' button ' you agree to the Terms of Use”). It should be noted, however, that such an action will not be deemed to manifest the user's assent to contractual terms if the invitation to do the action does not clearly notify the user that doing so will be deemed to signify the user's consent.

One instance where such notification was deemed insufficient occurred in Specht v. Netscape Communications Corp., 306 F.3d 17 (2d Cir. 2002). In Specht, the Second Circuit held there was insufficient notice that clicking on a “Download” button was subject to terms and conditions where the user was required to scroll to the bottom of the next screen to find the notification and link to the terms. Accordingly, the court held there was no assent because a reasonable user would not have become aware of those terms prior to downloading the software. Id. at 23. The court also rejected the argument that a “reasonably prudent offeree of downloadable software” would have been on inquiry notice that the download was subject to terms and conditions. Specifically, the court concluded that “where consumers are urged to download free software at the immediate click of a button, a reference to the existing license terms on a submerged screen is not sufficient to place consumers on inquiry or constructive notice of those terms.” Id. at 32.

In contrast to Specht, other courts have concluded that providing a statement regarding and a hyperlink to the terms of use in close proximity to something the user must click to complete the transaction “is a common practice in Internet business.” Cohn v. TrueBeginnings, LLC, No. B190423, 2007 WL 2181897 (Cal. Ct. App. Aug. 2, 2007). The Cohn court concluded that there is “nothing inherently unfair in requiring [a user] to access contractual terms via hyperlink.” Similarly, in Major v. McCallister, 302 S.W.3d 227 (Mo. Ct. App. 2009), the court found that a hyperlink statement to the Web site's terms, which was next to a “submit” button, constituted “immediately visible notice” sufficient to enforce the Web site's browsewrap agreement. Id. at 230 (distinguishing Specht because there was no evidence that the notice statement and hyperlink were hidden on a submerged portion of the screen).

Although drawing clear demarcations based on existing case law is difficult, courts appear to attach significance to the visibility and accessibility of the terms of use. Thus, while requiring a user to scroll through terms and conditions before manifesting assent constitutes the optimal method for strengthening an online vendor's position as to enforceability, placing the terms immediately adjacent to a box to manifest assent is preferable to merely placing the terms on a footer or other submerged link.

Timing of Notice

As often arises in the case of browsewrap agreements, a user may not be bound by the terms of a clickwrap agreement if he or she is not notified of those terms until after the transaction is complete. In Verio, the plaintiff operated a Web site that provided contact information on domain name registrants. Visitors to the site could submit a query for a specific domain name and the site would generate results containing information on the registrant of the domain name submitted in the query. The Web site's terms of use were first presented to the visitor as a disclaimer that accompanied the query results. Thus, the user did not have notice of the terms until the transaction had already been completed. Id. at 356 F. 3d at 401.

The court recognized that, at least as to the first query submitted, the user might not be bound by the terms. Id. The record revealed, however, that the user submitted requests on numerous occasions and thus had notice of, and would be bound by them, with respect to every subsequent query he submitted. Id. The Vario decision thus teaches that a Web site or software company should ensure that the user is notified of, and able to review, the applicable terms prior to completing the transaction or installing the software at issue.

Part Two, next month, covers browsewrap agreements.

Part One of a Two-Part Article

A growing number of courts have addressed the validity of contracts purportedly created through Web-based transactions. While the judiciary has produced mixed results in this area, a few trends have emerged ' notwithstanding the nuances presented by online transactions. These trends in large part reflect the recognition that, although electronic, online agreements nevertheless are properly considered “writings” that can be printed and stored. Thus, while online transactions involve new factual circumstances, they remain subject to the normal rules applicable to contract.

One aspect of “e-contracts” that has generated a considerable amount of jurisprudence is the enforceability of “clickwrap” and “browsewrap” agreements, in which a consumer manifests assent to terms and conditions, either through an affirmative act such as checking a box, or simply by accessing and using the services provided through a Web page. This article presents an overview of best practices for ensuring the application of your client's desired terms and conditions in the context of online browsing and sales, as well as software downloads and installations. Part One introduces the different types of online consent and covers clickwrap agreements.

Introduction

The ability to purchase goods and services via the Internet has afforded individuals and businesses alike countless opportunities to make purchases from vendors around the globe in a matter of seconds. To minimize interruptions in the purchase process, online vendors strive to integrate the presentation and acceptance of contractual terms so as to avoid distracting the user from completing the transaction. Although the distinction is not always clear, contracts formed
in this manner typically fall into one of two categories: “clickwrap agreements”
and “browsewrap agreements.” While some courts have found both types of agreements to be enforceable, clickwrap agreements are more routinely enforced than browsewrap agreements.

Clickwrap Agreements

A clickwrap agreement is created when an individual, typically while browsing a Web site or installing software, is presented with the vendor's contractual terms and prompted to undertake some affirmative action that evidences a manifestation of assent to those terms.

The manifestation of assent usually occurs when the visitor “clicks” his or her computer mouse to activate an icon stating that the visitor agrees to be bound by the terms of the agreement.

On a more general level, the term “clickwrap” refers broadly to any agreement where the offeree is given the opportunity to accept its terms by doing some affirmative act on a computer.

To determine whether a clickwrap agreement is enforceable, courts apply traditional principles of contract law and focus on whether the offeree had reasonable notice of, and manifested assent to, the agreement's terms. Thus, when the terms are conspicuously presented to the offeree, courts typically will find the clickwrap agreement enforceable, provided the offeree manifested consent.

In the context of online consumer transactions, a Web site may condition the user's acceptance of a clickwrap agreement as a prerequisite to completing an online purchase. In other instances, the Web site may require an affirmative act manifesting assent to the agreement as a prerequisite to navigating beyond the Web site's home page. Regarding software installation, the offeree's acceptance of the agreement is typically a requirement to his or her ability to install the software. Thus, if the user refuses to accept the agreement, the software installation will automatically be cancelled.

A key factor in the creation of a clickwrap agreement is the nature of the action deemed to manifest the offeree's acceptance. While some agreements require the offeree to perform a deliberate affirmative act in order to assent to the terms of the agreement, other agreements condition assent on conduct that is more subtle. In the latter scenario, courts may hesitate to enforce the agreement out of concern that the offeree did not receive sufficient notice of, and a fair opportunity to review, its terms. Thus, the critical inquiries for enforcement in most cases are: 1) whether the offeree had sufficient notice of and opportunity to review the agreement's terms; and 2) whether the conduct deemed to evidence assent to the agreement clearly establishes the offeree's knowing acceptance of the agreement's terms.

Browsewrap Agreements

Browsewrap agreements are similar to clickwrap agreements with the key exception that browsewrap agreements do not require the user to take any affirmative action specifically manifesting assent to the terms and conditions. Rather, users are deemed to have assented to browsewrap agreements by virtue of their mere use or “browsing” of the Web site containing the terms and conditions.

In the typical case, a browsewrap agreement is presented at the bottom of the Web site and informs the user that acceptance will occur upon the offeree's use of the site. Thus, courts considering browsewrap agreements usually hold that their validity turns on whether the user had actual or constructive knowledge of its terms prior to doing the act that purportedly manifests assent to those terms. Parties seeking to enforce a browsewrap agreement typically offer evidence that the user:

• Visited, or accessed, the Web site;
• Was put on notice, or should have been on notice, of the agreement and its terms, as well as that any continued use of the Web site would constitute assent to the agreement; and
• Continued using or browsing the Web site. Most Web sites that use a browsewrap agreement provide a hyperlink at the bottom of the Web page that directs the offeree to the agreement's terms. Others simply state at the bottom of the page that the Web site is subject to certain terms of use, followed by instructions on how the user can access them.

Courts are generally willing to enforce browsewrap agreements, provided:

• The Web site or software provides sufficient notice to fairly apprise the user that use (or continued use) of the Web site or software is governed by terms and conditions, and that any use (or continued use) of the Web site or software constitutes acceptance thereof; and
• The user is afforded a full opportunity to review the terms.

Not surprisingly, the more conspicuous the notice and opportunity to review the terms, the more likely a court will enforce those terms.

A few courts have gone further in enforcing browsewrap agreements, reasoning that the proliferation of online transactions with associated electronic terms and conditions has made it unreasonable for a purchaser to claim he or she was unaware the transaction was governed by additional terms. Accordingly, those courts held the purchaser was bound by the terms despite evidence that the user had neither actual nor constructive notice of the agreement. In such cases, the holding is often based in part on the particular purchaser's substantial familiarity and experience with online transactions.

Nevertheless, and in accordance with the application of normal contract principles, courts have been more hesitant to enforce browsewrap agreements than clickwrap agreements. This hesitation has resulted in seemingly conflicting opinions, making it difficult to extract bright line rules for the enforceability of a browsewrap agreement.

Clickwrap Agreement: Methods Of Manifesting Assent

Even though they are electronic, clickwrap agreements are considered to be writings because they are printable and storable. See, e.g., In re RealNetworks, Inc., Privacy Litigation, No. 00-c-1366, 2000 U.S. Dist. LEXIS 6584, 8-11, 2000 WL 631341, 3-4 (N.D. Ill. May 11, 2000). Thus, in determining whether clickwrap agreements are enforceable, courts apply traditional principles of contract law and focus on: 1) whether the user had reasonable notice of the agreement and its terms; and 2) whether the user manifested assent to the agreement. Clickwrap agreements are most likely to be enforced where they provide clear notice of their terms and require an unmistakable manifestation of assent from the user.

Typing Words of Assent

The most readily enforced clickwrap agreements are those that require the user to assent to their terms by typing a pre-designated word or phrase of affirmation, such as “I AGREE” or “AGREE,” before any transaction can proceed. In CompuServe, Inc. v. Patterson , 89 F.3d 1257 (6th Cir. 1996), one of the first published cases to address clickwrap agreements, the Sixth Circuit found such an agreement valid and enforceable. The CompuServe court held the defendant manifested consent when he typed “AGREE” into a form contained with an online software registration agreement. The defendant's execution of that agreement, which contained an Ohio choice of law provision and was with an Ohio-based company, was a key factor in the court's ruling that he was subject to personal jurisdiction in Ohio.

Although this method leaves no doubt as to the user's notice of the agreement, it is also more distracting than other methods and might be viewed as interrupting the purchase process. Thus, unless the transaction is of particular import, Web sites typically employ less intrusive methods for evidencing the user's assent.

Clicking Boxes or Other Objects to Signify Assent

The most common method utilized in a significant number of online transactions is the clicking of a box or other object to signify the user's assent to the terms and conditions prior to completing the transaction. The button is usually accompanied by a sentence stating, “By clicking 'Agree' you acknowledge that you have read, understand and agree to be bound by the terms and service.” Courts routinely enforce agreements created in this manner, particularly if the actual terms and conditions are displayed directly above the button. See , e.g. , Forrest v. Verizon Comms., Inc. , 805 A.2d 1007, 1010-11 (D.C. Ct. App. 2002) (fact that “scroll box” in electronic version of agreement displays only part of the agreement at one time does not preclude finding of adequate notice). Further, at least one court has held that it is not necessary to require the user to scroll all the way through the agreement's terms before he or she is allowed to accept. Realpage, Inc. v. EPS, Inc. , 560 F. Supp. 2d 539, 545 (E.D. Tex. 2007).

Another commonly used and enforced method is to provide a hyperlink to the terms and conditions directly above the “I Agree” button. See, e.g., Guadagno v. E*Trade Bank, 592 F. Supp. 2d 1263, 1267 (C.D. Cal. 2008) (text next to check box on Web page provided hyperlink to terms and stated “By checking this box, you acknowledge that you have reviewed ' Agreement '.”); DeJohn v. The .TV Corp. Int'l , 245 F. Supp. 2d 913, 915-16 (N.D. Ill. 2003) (same). This method avoids cluttering the purchase process by making the agreement's terms available via a hyperlink, as opposed to reproducing them on the Web page. At least some courts have rejected claims of lack of notice where the language above the “I Agree” button unambiguously notifies the user that the pending transaction is subject to terms and conditions and they can be accessed via a hyperlink. See, e.g., DeJohn, 245 F. Supp. 2d at 919 (fact that user did not read the terms via hyperlink “is irrelevant because absent fraud ', failure to read a contract is not a get out of jail free card”); Forrest, 805 A.2d at 1010 (“The general rule is that absent fraud or mistake, one who signs a contract is bound by a contract which he has an opportunity to read whether he does so or not”).

Require Assent for Transaction

Whatever the method for demonstrating assent, the user should not be allowed to complete the transaction without taking the necessary action to show assent. Where a transaction is structured in this manner, courts regularly have enforced the clickwrap agreement even where the user claimed not to remember accepting the agreement. See, e.g., ESL Worldwide.com, Inc. v. Interland, Inc., No. 06-CV-2503(LBS), 2006 WL 1716881, 2 (S.D.N.Y. June 21, 2006) (evidence that user accessed parts of Web site that he could not have accessed without first clicking the “Accept” box overcame user's claim that he did not remember doing so). Courts also have relied on evidence that a consumer's user account or e-mail address was associated with a transaction to establish that the consumer assented to the Web site's terms. See, e.g., Burcham v. Expedia, Inc., No. 4:07CV1963 CDP, 2009 WL 586513 (E.D. Mo. Mar. 6, 2009) (evidence that plaintiff's e-mail address was linked to user account created on travel site and plaintiff received receipt for travel purchase at that e-mail address overcame plaintiff's claim that he had no recollection of viewing terms or that someone else had assented to the terms without his knowledge).

On the other hand, where the user is able to complete the transaction without first manifesting consent, there is a stronger argument that the user knowingly rejected the terms but was allowed to complete the transaction anyway. At least one court has rejected this argument on the theory that an offeree who accepts a benefit with knowledge of its terms is deemed to have accepted those terms. See , Register.com, Inc. v. Verio, Inc. , 356 F.3d 393, 403 (2d Cir. 2004) (where the choice is to take the offer on its known terms or not take the offer, taking the offer constitutes acceptance of those terms).

Other Actions Intended to Signify Assent

Another type of clickwrap agreement makes acceptance of its terms part of the process of the transaction itself. For example, a Web site that sells software downloads may include a statement above the “Download” button that provides a hyperlink to the terms and conditions and states: “By clicking the 'Download' button below, you agree to the terms and conditions.” See , e.g. , Druyan v. Jagger , 508 F. Supp. 2d 228, 237 (S.D.N.Y. 2007) (finding a clickwrap agreement enforceable where it stated: “By clicking on the 'Look for Tickets' button ' you agree to the Terms of Use”). It should be noted, however, that such an action will not be deemed to manifest the user's assent to contractual terms if the invitation to do the action does not clearly notify the user that doing so will be deemed to signify the user's consent.

One instance where such notification was deemed insufficient occurred in Specht v. Netscape Communications Corp. , 306 F.3d 17 (2d Cir. 2002). In Specht, the Second Circuit held there was insufficient notice that clicking on a “Download” button was subject to terms and conditions where the user was required to scroll to the bottom of the next screen to find the notification and link to the terms. Accordingly, the court held there was no assent because a reasonable user would not have become aware of those terms prior to downloading the software. Id. at 23. The court also rejected the argument that a “reasonably prudent offeree of downloadable software” would have been on inquiry notice that the download was subject to terms and conditions. Specifically, the court concluded that “where consumers are urged to download free software at the immediate click of a button, a reference to the existing license terms on a submerged screen is not sufficient to place consumers on inquiry or constructive notice of those terms.” Id. at 32.

In contrast to Specht, other courts have concluded that providing a statement regarding and a hyperlink to the terms of use in close proximity to something the user must click to complete the transaction “is a common practice in Internet business.” Cohn v. TrueBeginnings, LLC, No. B190423, 2007 WL 2181897 (Cal. Ct. App. Aug. 2, 2007). The Cohn court concluded that there is “nothing inherently unfair in requiring [a user] to access contractual terms via hyperlink.” Similarly, in Major v. McCallister , 302 S.W.3d 227 (Mo. Ct. App. 2009), the court found that a hyperlink statement to the Web site's terms, which was next to a “submit” button, constituted “immediately visible notice” sufficient to enforce the Web site's browsewrap agreement. Id. at 230 (distinguishing Specht because there was no evidence that the notice statement and hyperlink were hidden on a submerged portion of the screen).

Although drawing clear demarcations based on existing case law is difficult, courts appear to attach significance to the visibility and accessibility of the terms of use. Thus, while requiring a user to scroll through terms and conditions before manifesting assent constitutes the optimal method for strengthening an online vendor's position as to enforceability, placing the terms immediately adjacent to a box to manifest assent is preferable to merely placing the terms on a footer or other submerged link.

Timing of Notice

As often arises in the case of browsewrap agreements, a user may not be bound by the terms of a clickwrap agreement if he or she is not notified of those terms until after the transaction is complete. In Verio, the plaintiff operated a Web site that provided contact information on domain name registrants. Visitors to the site could submit a query for a specific domain name and the site would generate results containing information on the registrant of the domain name submitted in the query. The Web site's terms of use were first presented to the visitor as a disclaimer that accompanied the query results. Thus, the user did not have notice of the terms until the transaction had already been completed. Id. at 356 F. 3d at 401.

The court recognized that, at least as to the first query submitted, the user might not be bound by the terms. Id. The record revealed, however, that the user submitted requests on numerous occasions and thus had notice of, and would be bound by them, with respect to every subsequent query he submitted. Id. The Vario decision thus teaches that a Web site or software company should ensure that the user is notified of, and able to review, the applicable terms prior to completing the transaction or installing the software at issue.

Part Two, next month, covers browsewrap agreements.