Mountain Law: Website use agreements: click at your own risk (column) | SummitDaily.com
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Mountain Law: Website use agreements: click at your own risk (column)

Noah Klug
Mountain Law
Rear view of a teenage girl using a computer
Getty Images/Ingram Publishing | Ingram Publishing

Are consumers bound by website use agreements? Let’s discuss some general principles in this area of law and explain why these agreements matter.

To start with, courts typically categorize website use agreements into two categories depending on the manner in which the consumer has notice of, or otherwise assents, to the terms of the agreement. “Clickwrap” agreements require the consumer to affirmatively click a box on the website — often an “I agree” button — acknowledging agreement to the terms of use before the consumer is allowed to proceed. In contrast, “browsewrap” agreements have hyperlinked terms of use that are typically found on a different webpage that the consumer does not have to visit to continue using the website. (There are also hybrid forms such as where the terms themselves are contained in a hyperlink, but the consumer must click a box to agree to them.)

The same contract principles that apply in the “real world” also apply to agreements online. This means that courts focus on whether the consumer manifested assent to the terms of the agreement. In this regard, courts generally decline to enforce browsewrap agreements because the consumer never actually indicates assent to the hyperlinked terms. For instance, a case called Nyugen v. Barnes & Noble refused to enforce a browsewrap agreement even though hyperlinks to the terms of use appeared at the bottom of every page on the website and next to buttons that the consumer had to press to finalize a transaction on the website.

In contrast, courts generally uphold clickwrap agreements on the basis that the user has assented to the terms of use. This can be true even where the user does not read the agreement. For example, a case called Davis v. HSBC Bank Nevada, N.A. upheld a clickwrap agreement whereby a consumer could get a $25 gift certificate for applying for a credit card, but the card itself had a $59 annual fee. The agreement was upheld, even though the consumer did not read the agreement because he had the opportunity to do so and clicked on a button indicating his assent. (When it comes to hybrid forms, the closer the agreement is to a true clickwrap agreement the more likely it is to be found enforceable.)

Website use agreements can have real consequences. For one example, these agreements often require arbitration of disputes rather than going to court and also often prohibit class actions by users against the website company, meaning that every arbitration has to be conducted separately. The combination of these two provisions is essentially that website companies are immune from lawsuits because every case must be expensively arbitrated, and numerous small claims cannot be joined together to make a large class action claim that is worth pursuing. This outcome has been supported through a series of controversial decisions by the United States Supreme Court.

Another example is illustrated by the famous “KlearGear.com” case, in which the website use agreement stated that the consumer agreed not to disparage the website company, and that any violation would entitle the company to $3,500. A consumer had a difficult time with customer service after making a purchase on the website and ultimately posted a bad review online. This prompted the company to report to the credit bureaus that the consumer had an outstanding debt for $3,500. The consumer sued the company and obtained a default judgment, but the judgment was apparently never collected, and the consumer’s credit was damaged. The enforceability of agreements not to disparage of the sort at issue in the case is a hot issue that has not yet been conclusively decided.

In sum, website use agreements can be enforceable under certain circumstances and have real consequences. Consumers should be wary of them.

Noah Klug is owner of The Klug Law Firm, LLC, in Summit County, Colorado. He may be reached at (970) 468-4953 or Noah@TheKlugLawFirm.com


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