Browse-wrap vs. Click-wrap
“Browse-wrap” refers to an agreement governing the access to or use of materials on a website or downloadable product, whereby the terms of the agreement are posted on the website, usually as a hyperlink. The hyperlink leads to another webpage, which will set forth the terms and conditions of the agreement. In this setup, the terms do not pop up and do not require an action be taken by the user in order to continue. Therefore, no affirmative action is required of the user to acknowledge or agree to the terms of the agreement.
Thus, the difference between browse-wrap and click-wrap is that browse-wrap does not require a user to do anything but visit the website or download a product to assume consent to terms, whereas click-wrap requires the user to affirmatively engage in some action – such as clicking a box – to show consent. As recently stated by a California federal district court, “[u]nlike a clickwrap agreement, a browsewrap agreement does not require the user to manifest assent to the terms and conditions expressly ... a party instead gives his assent simply by using the website.... The defining feature of browsewrap agreements is that the user can continue to use the website or its services without visiting the page hosting the browsewrap agreement or even knowing that such a webpage exists.” Gutierrez v. FriendFinder Networks Inc., 2019 WL 1974900, at *4 (N.D. Cal. May 3, 2019) (citation omitted).
Courts Are More Likely to Enforce Click-Wrap Agreements
After reviewing the California common law and other relevant legal authority, we conclude that under the circumstances here, plaintiffs’ downloading of SmartDownload did not constitute acceptance of defendants’ license terms. Reasonably conspicuous notice of the existence of contract terms and unambiguous manifestation of assent to those terms by consumers are essential if electronic bargaining is to have integrity and credibility. We hold that a reasonably prudent offeree in plaintiffs’ position would not have known or learned, prior to acting on the invitation to download, of the reference to SmartDownload’s license terms hidden below the “Download” button on the next screen.
On these facts, Plaintiff agreed to be bound by the Terms. Plaintiff’s call with the customer service representative in 2013 gave him at least inquiry notice of the Terms. The customer service representative informed Plaintiff that he had been banned because he violated the Terms. Call. Tr. at 3–4. A few seconds later, when Plaintiff asked for further elaboration as to why he had been banned from the chat, the customer service representative reiterated: “Because we set restrictions on the website so you need to follow our rules and regulations.” Id. This constituted notice to Plaintiff that if he wanted to use the site, he needed to comply with the Terms. See Nguyen, 763 F.3d at 1177 (“[W]here the website contains an explicit textual notice that continued use will act as a manifestation of the user’s intent to be bound, courts have been more amenable to enforcing browsewrap agreements.”).
Courts Have Reached Varying Results When Considering Hybrid Click-Wrap Agreements
Recent case law underscores the risk of utilizing even so-called “modified” or “hybrid” click-wrap agreements that display the terms and conditions of use on separate webpages and do not require users to check a dialog box indicating that they read and agree to the displayed terms. For instance, two courts have recently reached opposite conclusions when considering the enforceability of arbitration provisions included within terms and conditions that customers could, but were not required to, access via hyperlinks when booking online products or services. Compare Calderon v. Sixt Rent a Car, LLC, 2021 WL 1325868 (S.D. Fla. Apr. 9, 2021), with Wollen v. Gulf Stream Restoration & Cleaning, LLC, 2021 WL 2878703 (N.J. Super. Ct. App. Div. July 9, 2021). The courts’ decisions in those matters suggest that the enforceability of hyperlinked terms and conditions may in some cases hinge on whether the user is expressly directed to read the terms and conditions.
In Calderon, a Florida district court, applying California law, enforced an arbitration provision that customers could access via a hyperlink situated above a “BOOK NOW” button that they were required to click in order to complete online reservations. 2021 WL 1325868, at *7. There, a putative class action was filed against Sixt Rent a Car, a luxury rental-car company, alleging that Sixt engaged in a company-wide scheme to systematically charge unfair, deceptive, and unauthorized repair fees to customers. Id. at *1. The specific claims of one of the named plaintiffs, Charnis, arose out of a rental car reservation he booked on Sixt’s website. Id. at *1-2. Sixt filed a motion to compel arbitration and to stay Charnis’ claims based on a mandatory arbitration provision within the terms and conditions that Charnis confirmed he read and accepted when he booked the online reservation. Id. A corporate representative of Sixt attested to what the reservation booking process on Sixt’s website was at the time Charnis booked his reservation. Id. at *2. The representative attested that, before completing a rental car reservation on Sixt’s website, customers were required to click a “BOOK NOW” button. Id. at *2. Immediately above the “BOOK NOW” button was a statement that read, “By clicking the button, I confirm that I’ve read and accepted the rental information and the terms and conditions.” Id. The phrases “rental information” and “terms and conditions” were hyperlinked in orange against a white background. See id. Clicking on the “terms and conditions” hyperlink displayed a rental jacket, which contained the at-issue arbitration provision. Id. at *3.Charnis did not dispute this description of the booking process or that he clicked the “BOOK NOW” button when he booked his reservation. Id. at *6.
The Florida district court, applying California law, found that, based on these facts, Charnis agreed to arbitrate his claims against Sixt. Id. at *7. In so doing, the court acknowledged that the agreement involved in Sixt’s online booking process was not a “pure” click-wrap agreement because it included the rental jacket’s terms and conditions in the form of a hyperlink that would direct Charnis to another page and did not expressly require Charnis to check a box stating that he agreed to the displayed terms. Id. Nevertheless, the court determined that Charnis manifested his assent to arbitration by clicking the “BOOK NOW” button, which confirmed that he read and agreed to the displayed terms, including the arbitration provision. Id. Accordingly, the court granted Sixt’s motion to compel arbitration and stay Charnis’ claims. Id. at *8.
In Wollen, the Superior Court of New Jersey, Appellate Division recently considered a mandatory arbitration provision contained within terms and conditions that customers could access as part of a substantially similar online booking process. See 2021 WL 2878703,at *1-2. Unlike the Florida district court in Calderon, however, the New Jersey court in Wollen refused to give effect to the arbitration provision at issue because the court determined that the method of delivery did not establish that the plaintiff agreed to arbitration. See id. at *5.
At issue in Wollen was whether the motion judge properly granted defendant HomeAdvisor’s motion to compel arbitration of the plaintiff’s claims against it based on a mandatory arbitration clause embedded within HomeAdvisor’s terms and conditions. See id. The plaintiff’s claims against HomeAdvisor stemmed from her dissatisfaction with a third-party contractor she retained pursuant to a referral she obtained through HomeAdvisor’s website. See id. at *3-4. When the plaintiff submitted her referral request on HomeAdvisor’s website, she was required to navigate multiple webpages, none but the last of which referred to HomeAdvisor’s terms and conditions. Id. at *1. The final webpage required her to click a button entitled “View Matching Pros.” Id. at *1-2. Immediately below that button was a single line of text providing, “By submitting this request, you are agreeing to our Terms & Conditions.” Id. at *1. The phrase “Terms & Conditions” was displayed in blue font against a white background and acted as a hyperlink. Id. at *2. Clicking on the “Terms & Conditions” hyperlink would direct the user to a separate document, entitled “HomeAdvisor Terms & Conditions,” which contained the arbitration provision at issue. Id. at *2. When deposed, the plaintiff stated that she did not recall clicking on the “Terms & Conditions” hyperlinked text before clicking on the “View Matching Pros” submit button. Id. at *3.
The New Jersey appellate court concluded based on these facts that the motion judge improperly referred the plaintiff’s claims against HomeAdvisor to arbitration. Id. at *9-10. In reaching this conclusion, the court determined that the “Terms & Conditions” hyperlink did not provide reasonable notice of HomeAdvisor’s terms and conditions to “the reasonably prudent internet user” because, although the words “Terms & Conditions” were offset in blue font, they were “not underlined, bolded, or enlarged.” Id. at *9. Further, the court opined that the hyperlink was “vague, ambiguous and misleading” because “absent from the hyperlink’s wording was any indication that the user was required to read the terms and conditions before submitting her request for service professionals.” Id.
The court found it “[m]ost significant,” however, that the plaintiff “was not required to affirmatively assent [to] – or even view – the terms and conditions.” Id. “HomeAdvisor,” the court explained, “did not require plaintiff to open, scroll through, or acknowledge the terms and conditions by ‘clicking to accept’ or checking a box that she viewed them before clicking the View Matching Pros submit button.” Id. As a result, the court determined that there was no evidence in the record that the plaintiff accepted, let alone viewed, HomeAdvisor’s terms and conditions before placing her referral request. Id. By extension, the court determined that HomeAdvisor failed to establish that the plaintiff assented to its terms and conditions, including the arbitration provision at issue. Id.
Notably, the court concluded its opinion with the following instruction:
Our decision should not be interpreted to suggest that a consumer contract cannot be formed by reference to a hyperlinked document, or that we are invalidating browsewrap agreements in toto. At the very least, however, the internet user should be directed in words – and not just by font of a different hue – to click on that hyperlink. In the alternative, the hyperlinked document, itself, should contain some semblance of an acknowledgment, or inability to submit a request unless the user scrolls through the terms and conditions at issue.
Id. at *10.
What a Company Should Consider
Locations where a company may consider providing the terms and conditions of the agreement, or at a minimum, notice of them, should be anywhere a user is requested to undertake an action, such as:
- Downloading software or an application
- Creating an account page
- Signing on to an account
- Checking out of an account, such as when placing an order