What does it take to create a binding contract online? This question has vexed courts, consumers, and e-commerce companies since the dawn of the Internet.
The easy answer is to require a visitor to click a box or take some other affirmative action to clearly and unambiguously confirm agreement to a clearly disclosed set of terms. Common methods include requiring the visitor to scroll through the terms to click “Accept” at the end, or at least to include a clear and conspicuous link to the terms where the visitor is clicking the “Accept” button.
For a variety of reasons, however, many companies offering goods or services online don’t want to create barriers to visit their sites, at least not at the outset. Instead, it is common practice to merely post a set of terms and provide a footer link to those terms on every page of the site (or at least on the home page) and do nothing more.
Recent case law has confirmed that merely posting a set of terms with a footer link (and nothing more) generally won’t create a binding contract. This was exactly the holding by the federal Ninth Circuit Court of Appeals in California in 2014 in Nguyen v. Barnes & Noble, Inc. It also is consistent with earlier cases where courts would look for either an a affirmative acceptance of the terms, or at least clear and conspicuous disclosure of terms in a manner likely to put consumers on notice of their existence. An example of those earlier decisions is Specht v. Netscape Commc'ns Corp., a 2002 ruling from the federal Second Circuit Court of Appeals in New York authored by Sonia Sotomayor who now sits on the United States Supreme Court.
What options are left for a company that doesn’t want (or need) to force visitors to affirmatively accept a set of terms as a condition of gaining access to a website?
The virtue of the in-between approach is that it can create clear consent and a binding contract, at least with the people who actually engage in a transaction on the site. The weakness it that it leaves the enforceability of the site’s terms in limbo vis-à-vis casual visitors who don’t enter into a transaction. Many site operators may be satisfied with this result. Establishing binding terms with actual customers is generally more important than with casual visitors.
Need for Clarity
In short, small details, such as size, location and wording of consent language can make a big difference. Companies conducting business online are well advised to consider these recent cases and look at their sites to see if they are creating binding contracts with their users.