There are three main kinds of electronic and layered contracts (although it is disputed that these are agreements at all):
- Shrinkwrap (products that you agree to terms when you open the box and don’t return within a certain time)
- Clickwrap (Clicking on “I agree” to the terms and conditions to use a website)
- Browsewrap (Made available on a free website telling visitors that by visiting the site, they agree to the terms)
DeFontes v. Dell, Inc.
984 A.2d 1061 (Rh. 2009).
DeFontes is the plaintiff in a class action suit against Dell (defendant). Defendant asked for a stay due to an arbitration clause, lost and appealed.
Question
Whether there was proper notice to the purchaser that they should return the product or accept the terms.
Rule
Governed under UCC Article 2: A contract can be formed in many ways. Here, the seller is the offeror while the purchaser is the offeree. Thus, when the purchaser send the package, they are the “master of terms” and can include their form in the package to be accepted as additional terms as long as they are given an adequate opportunity to return them.
Holding
There was not adequate notice of the return policy so the arbitration term cannot be enforceable.
Facts
Plaintiffs purchased a computer through Dell or third-party Dell providers. They sought action because they believe that they were wrongly taxed for the purchase. The defendant said that they were not allowed to bring action except in an arbitration according to the terms outlined in the package.
Analysis
The court begins by saying that this is a contract governed under the UCC, accepts one of two potential standards (here, the purchaser is the offeree, not the offeror). Thus, the terms under §2-207 does not apply because there is no battle of the forms. Because of this, the defendant needs to show that there was fair notice of the return policy. Here, the language necessary to reject the terms with return is not present. Therefore, the arbitration term is not applicable.
Takeaway
When it comes to shrink-wrap agreements, there are two potential options. First, where the purchaser is the offeror and the seller is the offeree. Here, the agreement would be made at the point of sale and any terms would need to be agreed on at that moment. The pro of this is that the terms are set and the purchaser has a lot of say in what the terms are.
The second option, and accepted in this court, is that the seller is the offeror and the purchaser is the offeree. There are criticizisms of this method because most of the time the purchaser is the offeror and there was no explanation why this switched here. The result is that the terms are not set at the point of sale and additional terms can be added upon receipt as long as the purchaser is give the option to reject them through return.
Additional Notes
The theory is that they accepted the contract by receiving the package and not returning the goods.
The contract was formed when the purchaser received and did not return. However, there is a problem in doing this because then the seller could add terms without the agreement of the purchaser.
The other problem is that if he decides not to go along with the terms, then he has an obligation to return the product. Why? Because at this point, there is no obligation to return the product.
However, the other method is not much better. Although the contract is formed at the “click”, Dell would still have a problem with making sure the purchaser would have heard all the terms.
So what’s the lesson? You return the computer because you rejected the shrink-wrap terms.
Long v. Provide Commerce, Inc.
200 Cal. Rptr. 3d 117 (2016).
Long is the plaintiff against Provide. Provide said that the dispute should be settled in arbitration but lost and appealed.
Question
Whether the website put a reasonably prudent user on inquiry notice of the terms of the contract.
Rule
“Where a website makes its terms of use available via a conspicuous hyperlink on every page of the website but otherwise provides no notice to users nor prompts them to take any affirmative action to demonstrate assent, even close proximity of the hyperlink to relevant buttons users must click on – without more – is insufficient to give rise to constructive notice.”
In other words, the purchaser must be warned that they are agreeing to the terms, not just shown the terms.
Holding
The placement here was not conspicuous enough to provide proper notice. Trial court affirmed.
Facts
The plaintiff had purchased flowers from the website for mothers day. He shipped them directly there believing that they were pre-arranged as advertised. However, the flowers came unassembled and he sued for a violation of law. Provide said that he could not sue in court because he had agreed to the arbitration clause listed in the terms which were shown on every page of the website, the checkout screen and in the confirmation email. The trial court disagreed and said that there was not sufficient notice.
Analysis
Here, there was not conspicuous notice. The court even applied the lessor standard that did not require the additional notice. Because the plaintiff would have had to scroll, search, and actively seek out the terms (the typeface could blend in with the background and was not proximate enough to the fields) the plaintiff might not have known the terms were there at all. This is also true with the email confirmation with the terms being below several advertisements and purchase confirmation.
So, even though the court says they wouldn’t have passed the lessor standard, they also say that companies should know that they would have to follow a greater standard, putting some language on the website that warns the purchaser that by submitting a purchase, they are agreeing to the terms. In other words, a link to the terms is not enough (it requires additional notice).
Takeaway
Browsewrap terms may be available but they require two things.
- Location of the terms not be conspicuous, meaning, make the hyperlink very obvious.
- Add some language that warns the purchaser that use of the website means agreeing to the terms.
Additional Notes
This case is a question about whether there was a manifestation of assent. The principle is whether the terms were conspicuous enough to have put him on notice of the terms enough to determine that there was assent. No notice = No assent.
So, lack of conspicuousness resolves part of the issue. However, there is required language that is supposed to give the purchaser notice that they are subject to the terms and conditions for acceptance.
Disclaimer
The content contained in this article may contain inaccuracies and is not intended to reflect the opinions, views, beliefs, or practices of any academic professor or publication. Instead, this content is a reflection on the author’s understanding of the law and legal practices.
