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Click-Through Contract Ruled Unenforceable

The New Jersey Court of Appeals recently ruled that an arbitration provision in a click-through online contract was unenforceable where the clickable icon failed to disclose that the consumer website user was forming a contract. (Law.com article). 

Wollen v Gulf Stream Restoration & Cleaning, LLC, __ N.J. Super. __, 2021 N.J. Super. LEXIS 94 (App. Div. July 9, 2021), involved a home remodeling website that promised consumers "free project cost information" and the ability to select local home remodeling contractors.

The plaintiff, Wollen, navigated through the site, providing information on her home project.  In response, the website offered Wollen the ability to "view matching pros" if Wollen would client on a button with that label.  Believe the button was the legend, "By submitting this request, you are agreeing to our Terms & Conditions."  

The legend contained a hypertext link to a set of online terms.  That page, in turn, linked to a second page of terms that contained a waiver of jury trial and an agreement to submit to mandatory arbitration.

When problems arose with the contractor Wollen selected, she sued the website operator, only to have the operator interpose the mandatory arbitration clause as a defense.

On appeal, the New Jersey Court of Appeals ruled that the second-level website terms were unenforceable "because the defendant company did not demonstrate that the consumer plaintiff was on notice of the arbitration provision prior to submitting her service request through the website [or that the consumer otherwise] was aware of the arbitration provision.” 

The New Jersey decision cited many of the well-known cases involving click-through contracts, including Specht v. Netscape Commc’ns Corp., 306 F.3d 17 (2d Cir. 2002) and Caspi v. Microsoft Network L.L.C., 323 N.J. Super. 118 (App. Div. 1999).  These cases, and many others that have followed in the past twenty years, make clear that, to be enforceable, the click-through contract must make clear to the consumer website user that clicking will create a contract.  

The Wollen court punished the website operator because its clickable button was not clear.  The button said "view matching pros" and not "I Agree" or words of similar import.

Practitioners should take care when crafting click-through contracts.  It is not sufficient for the online terms to be clear.  It is necessary for the clickable button itself to identify clear the expectation that a click will form a binding contract.  Obscuring that fact will likely lead to an unenforceable contract. 

“Because the defendant company did not demonstrate that the consumer plaintiff was on notice of the arbitration provision prior to submitting her service request through the website [or that the consumer otherwise] was aware of the arbitration provision.”

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click-through contracts, online contracts, ecommerce, insights, wilson_jonathan, corporate and business, contract disputes