Almost all social media sites contain “Terms of Service” (“TOS”). Are they enforceable against users? It depends on the presentation and the issue.
The fundamentals of contract law remain intact. “While new commerce on the Internet has exposed courts to many new situations, it has not fundamentally changed the principles of contract.” (Register.com, Inc. v. Verio, Inc., 356 F.3d 393, 403 (2d Cir. 2004)). Contracts cannot be mandated unilaterally. Contract law requires a “mutual manifestation of assent, whether by written or spoken word or by conduct . . .” (Nguyen v. Barnes & Nobles, Inc., No. 12-56628 (9th Cir. August 18, 2014)(“Nguyen”); Specht v. Netscape Commc’ns Corp., 306 F.3d 17, 29 (2d Cir. 2002)(“Specht”)).
How does one manifest consent in the Internet age?
“Clickwrap” agreements―those requiring an affirmative response, such as clicking an “I agree” box―have been upheld because the user had reasonable notice and manifested assent. This is true even if the user later claimed not to have read the document. (See, e.g., Feldman v. Google, Inc., 513 F. Supp.2d 229 (E.D.Pa. 2007)). A clickwrap agreement is frequently presented through a pop-up box or a page that requires the user to scroll through to the agreement’s end before interacting further. Facebook’s “click accepted” TOS with a forum selection clause were upheld by the Southern District of New York in Fteja v. Facebook, 2012 U.S. Dist. LEXIS 12991 (S.D.N.Y. Jan. 24, 2012). Clickwrap agreements might be ruled unenforceable on other grounds, of course. In Bragg v. Linden Research Inc. (filed May 2006), in which plaintiff disputed ownership of virtual land in a Second Life account, the court refused to enforce an arbitration clause. In the equivalent of an unconscionability finding, the court stated that Second Life is a business that operates across multiple states and therefore it may be sued outside of the state designated in its TOS (reported at http://arstechnica.com/tech-policy/2007/06/second-life-land-dispute-moves-offline-to-federal-courtroom/).
A “browsewrap” agreement, in contrast, does not require the user’s input. The owner inserts a hyperlink at the site’s top or bottom, and it might advise users within a webpage that the TOS may be so accessed. Typically, no record is created of whether the user clicked the hyperlink, found the TOS, and read them. Some sites require the user to click multiple layers to reach the TOS. Other sites are more proactive by alerting the user on the account setup page that, by opening the account, he/she is agreeing to the TOS.
Are these passive measures sufficient to establish a binding agreement?
Enforceability depends on user interaction. “[T]he touchstone of the inquiry under either state’s law is the parties’ outward manifestations of assent.” (Schnabel v. Trilegiant Corporation, 697 F.3d 110 (2d Cir. 2012)). Relying upon the Restatement (Second) of Contracts Section 19(2), the Second Circuit continued, “[T]he conduct manifesting such assent may be words or silence, action or inaction, but ‘[t]he conduct of a party is not effective as a manifestation of his assent unless he intends to engage in the conduct and knows or has reason to know that the other party may infer from his conduct that he assents.” In Schnabel, plaintiffs contested subscription fees in a service called “Great Fun.” They were apparently confused by hyperlinks in pages that appeared after plaintiffs made a purchase from Priceline.com. The Second Circuit found that plaintiffs were never put on inquiry notice of the TOS arbitration provision. Nor did subsequent auto-debits from their credit cards create a binding contract obligation because the auto-debits were considered too passive an activity. (Id.) Similarly, the court in Hines v. Overstock.com, 668 F.Supp.2d 362 (E.D.N.Y. 2009), aff’d No. 09-4201-cv (2d Cir. June 3, 2010), refused to enforce an arbitration clause in the TOS of Internet retailer Overstock because there was no evidence that consumers had knowledge of or read the policy. Overstock had merely provided on the website that “Entering the Site will constitute your acceptance of these Terms and Conditions.”
Notice of the existence of the TOS is a crucial factor. In analyzing a Barnes & Noble site in Nguyen, the Ninth Circuit found no evidence that plaintiff had received actual notice of the TOS or that the user was affirmatively required to acknowledge the TOS before completing an online purchase. The court observed, “Courts have been more willing to find the requisite notice for constructive assent where the browsewrap agreement resembles a clickwrap agreement―that is, where the user is required to affirmatively acknowledge the agreement before proceeding with the use of the website.” (Id.). Browsewrap agreements are not per se unenforceable. The court noted that one was enforced in Zaltz v. JDATE, 952 F. Supp.2d 439 (E.D.N.Y. 2013). Therefore, before opening an account, members checked a box to confirm that they both read and agreed to the TOS.
Even with knowledge of these factors, browsewrap enforcement remains unpredictable. In Nguyen, Barnes & Noble had argued that its hyperlink was in the bottom left-hand corner of every page, in close proximity to the buttons a user must click to complete an online purchase. Additionally, its hyperlinks on the checkout screens were presented in underlined, color-contrasting text. The Ninth Circuit nonetheless found this arrangement insufficient because the purchase screen did not prompt the user to review the TOS.
Courts have, of course, dealt with functional provisions of TOS, such as those of Twitter or Facebook, without lengthy analysis of their website location. The learning from Nguyen might best be that presentation and notice will be given greater scrutiny if the site owner wishes to enforce a purchase or arbitration provision against a user. Therefore, the best position is to get the user’s consent similar to a clickwrap agreement.