Based on the time that people spend on the internet and their phones, most people in America have at one time in their life agreed to contractual terms through the terms of service agreement or terms and conditions agreement. If you think about it, every time you visit a website to read the news, use the social media account, or even by a pair of jeans, you are binding yourself to online contractual terms.
New York courts view internet contracts under the same principles as written contracts.i To form a valid contract under New York law, there must be an offer, acceptance, consideration, mutual assent and intent.ii
The courts have identified four types of online consumer contracts: (a) browsewrap; (b) clickwrap; (c) scrollwrap; and (d) sign-in-wrap. Browsewrap exists where the user assents by merely using the site. Clickwrap refers to the assent process by which a user must click “I agree,” but not necessarily view the contract to which she is assenting. Scrollwrap requires users to scroll physically through an internet agreement and click on a separate “I agree” button to consent to the terms. Sign-in-wrap couples assent to the terms of a website with signing up for the site’s services.iii
New York courts often enforce clickwrap agreements where a user assents to the terms and conditions posted on a website by clicking on a button that says “I agree” or “yes,” as long as they had a sufficient chance to read the agreement and an unambiguous method of accepting or declining. This action of clicking a button shows that the user has some constructive knowledge of the agreement, from which knowledge a court can infer acceptance.iv
In other types of agreements, courts have identified three general principles guiding the enforceability of online agreements: First, the website must place a reasonably prudent user on inquiry notice of the agreement’s terms; second, “the design and content of the website must encourage the user to examine the terms clearly available through hyperlinkage”; and third, agreements will not be enforced “where the link to the agreement is buried at the bottom of a webpage or tucked away in obscure corners of the website.”v
When these agreements are valid, users are bound by the terms as if they had signed a written contract and are liable for breach of the agreement. In addition, failing to read a contract is not a defense to contract formation.vi It is also worth noting that terms of service agreements that include a unilateral provision stating the company can change the agreement without notifying the customers are unenforceable. There are many case examples of cases involving large corporations including Blockbuster Inc, Talk America, Inc., and Safeway Inc. The company must relay any changes in the terms to the customer to be legal.
Yoars Law has experience in helping clients understand if website terms and conditions are legally binding, drafting such terms, and in litigating breaches of terms. At Yoars Law, we focus on being proactive business and legal advisors for their clients, guiding them through the complex legal issues as they arise and being zealot advocates when needed. We also provide transparent and predictable legal fees so our clients can consistently manage their budgets.
i Hines v. Overstock.com, Inc., 668 F. Supp. 2d 362, 366 (E.D.N.Y. 2009) (quoting Register.com, Inc. v. Verio, Inc., 356 F.3d 393, 403 (2d Cir. 2004)), aff’d, 380 Fed. App’x 22, 25 (2d Cir. 2010).
ii Register.com, Inc. v. Verio, Inc., 356 F.3d 393, 427 (2d Cir. 2004) (internal citation omitted).
iii Berkson v Gogo LLC (97 F. Supp. 3d 359, 394-403 [EDNY 2015]).
iv Hines v. Overstock.com, Inc., 380 Fed. App’x 22, 25 (2d Cir. 2010); see also Starke v. Gilt Groupe, Inc., 13-Civ.-5497, 2014 U.S. Dist. LEXIS 58006, 2014 WL 1652225 (S.D.N.Y. April 24, 2014) (“there must be a manifestation of mutual assent sufficiently definite to assure that the parties are truly in agreement with respect to all material terms”).
v Resorb Networks, Inc. v YouNow.com, 51 Misc. 3d 975, 30 NYS3d 506, 511 (Sup Ct, NY County 2016)
vi Fteja v. Facebook, Inc., 841 F. Supp. 2d 829, 839 (S.D.N.Y. 2012).