Click with Caution
As you browse a website, be cautious before you click on the user agreement; you might not even realize you are entering into an enforceable contract. This issue was recently addressed by a California appellate court in B.D., a Minor, etc., et. al. v. Blizzard Entertainment, Inc.
In Blizzard, a dispute arose between a “user” and the “owner” of an online gaming website. The user filed a law suit in state court, but the owner moved to compel arbitration, arguing that the dispute resolution provision incorporated into its online licensing agreement controlled.
The court held in favor of the owner and concluded that the website user had sufficient notice which made the arbitration provision enforceable. In doing so, it identified the different forms of online agreements to which consumers should be aware:
- A “clickwrap” agreement is one in which the website user has to physically click a button agreeing to or accepting the terms of use of the website.
- A “scrollwrap” agreement is a clickwrap agreement which requires the user to physically scroll to the bottom of the agreement to click the button to accept the terms.
- A “browsewrap” agreement is one in which a user of the website agrees to accept the terms of use simply by browsing or accessing the site. The terms of use are likely hyperlinked to another page, but there is no need to physically read and accept the terms.
- A “sign-in wrap” agreement combines the browsewrap and clickwrap agreements by requiring the user to sign up to use the internet service and as part of the sign-up process they must accept the terms of use in order to access the service for which they are signing up.
California Courts have generally found clickwrap and scrollwrap agreements are enforceable because they provide sufficient notice to the user. In contrast, browsewrap agreements are unenforceable because they do not provide sufficient notice. Sign-in wraps vary by court, depending on the facts – when signing up for a single use/ one-time purchase, courts have found that consumers would not reasonably expect to be bound to some agreement, as compared with a consumer signing up for an ongoing relationship with the website. As such, when the purpose of the site is to create a “forward-looking,” more “long term” relationship with the user, a sign-in wrap agreement will most likely be deemed valid.
In the Blizzard case, in order to sign up to use the website, the user had to accept the terms of use, including the dispute resolution provision, in the form of a pop-up. The dispute resolution provision was hyperlinked in bold, blue font, and the court determined that the format of the pop-up gave the user sufficient notice that they were agreeing to be bound by a contract. Further, this was a website in which one signed up in order to continuously use it, as opposed to signing up for a one-time purchase. As such, the court found that the arbitration agreement was enforceable, and ruled in favor of website owner.
So, think twice before you “click,” and make sure to review the online agreement before you give your consent.