Business Legal Tips

Enforceable E-Commerce Website Terms of Use

Does your e-Commerce business website have website terms and conditions or terms of use?   Are they binding on customers who buy from your website? Don’t be so sure!

A recent case from the Northern District of Illinois highlights some potential problems.  In that case, the court denied a motion to compel arbitration in a putative class action and found that the defendants failed to show that the plaintiff had agreed to arbitrate the dispute when navigating through one of the Defendants’ website. See Anand v. Heath, et al., No. 19-0016 (N.D. Ill. June 28, 2019) (“Anand”).

The plaintiff in Anand registered and completed a survey for a gift card on a website owned operated by one of the defendant’s subsidiaries.   During her registration, the plaintiff  submitted her contact information, including her telephone number.  After receiving allegedly unsolicited telemarketing calls, the plaintiff filed a putative class action and two of the defendants moved to compel arbitration pursuant to the website’s terms and conditions.

Website Terms and Conditions

On the website, the Plaintiff encountered a large blue “Continue” button directly below the words “I understand and agree to the Terms & Conditions which includes mandatory arbitration and Privacy Policy.”  There was no dispute that the Plaintiff clicked on the “Continue” button in order to register.  However, the terms and conditions were hyperlinked on the screen at the words “Terms and Conditions” but the defendants presented no evidence that the plaintiff clicked on the hyperlink.   Instead, the defendants argued that the plaintiff accepted that agreement and the terms and conditions by virtue of clicking on the “Continue” button.

The Decision

The court disagreed and denied the Defendants’ motion to compel arbitration.   The court reasoned that the plaintiff “was not placed on reasonable notice that she was manifesting assent to the website’s terms and conditions by clicking the ‘Continue’ button.”  The court noted that the online agreement at issue was a variation of a hybrid-wrap agreement which is a type of agreement that presents a user with a hyperlink to the terms and conditions and a prompt to manifest acceptance of those terms.  Although these types of agreements can be enforceable, this case was different according to the court because the website did not include language explaining that any user was accepting the terms and conditions by clicking on the “Continue” button.

Website Lessons for Massachusetts Businesses

Although this decision does not apply Massachusetts law, the ruling is a reminder that Massachusetts business owners should carefully consider how the terms and conditions on their website are presented. 

In Massachusetts, website terms and conditions (or terms of use) are enforceable so long as any consumer who purchases goods or services off the website has “Reasonably conspicuous notice of the existence of the contract terms and unambiguous manifestations of assent to the terms by consumer.” Ajemian v. Yahoo, 83 Mass. App. Ct. 565, 574-575 (Mass. App. Ct. 2013) (quoting Sprecht v. Netscape Communications Corp. 306 F.3d 17, 35 (2nd Cir. 2002).  In Anand, for example, it was unclear whether the terms and conditions were conspicuous enough or whether an individual who clicked on Continue button was also accepting the terms and conditions.  This problem could have been solved by making the terms and conditions larger and more conspicuous and by including language that stated in no uncertain terms that by clicking on “Continue” that individual was accepting the terms and conditions of the website.

If you’re uncertain about whether your business website terms and conditions (or terms or service) are enforceable, please contact me or an attorney who is knowledgeable about these matters to discuss and evaluate our website.


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