A Tennessee based federal trial court recently declined to grant summary judgment in a lawsuit involving a contract dispute between a manufacturer and a reseller. The court found a genuine dispute of fact existed as to whether the parties reached an agreement via a clickwrap agreement.

The case involved Jim Schumacher LLC and Spireon Inc. Schumacher filed the lawsuit, claiming Spireon breached a contract prohibiting Spireon from dealing directly with Schumacher’s customers.

In 2005 Schumacher, a reseller of GPS equipment, entered a resale agreement with a predecessor to Spireon. That agreement allowed Schumacher to sell non-Spireon products and prohibited Spireon from contacting Schumacher’s existing customers.

In 2009, and later in 2010, Spireon changed the terms of the reseller agreement. The new agreement prohibited resellers from selling non-Spireon products, and permitted Spireon to directly contact customers of its resellers. Spireon presented the amended agreement on its Web site portal. Resellers could access the portal only after agreeing to the new terms.

Schumacher purposely avoided using the portal, and instructed his only employee with access to Schumacher’s credentials to do the same. Nonetheless, Spireon presented evidence that on at least two occasions, someone using Schumacher’s credentials accepted the new terms.

In 2009, Spireon began selling to Schumacher’s clients directly, and in 2011, Spireon complained that Schumacher was improperly selling non-Spireon products. On that basis, Spireon terminated the deal.

Schumacher sued, claiming Spireon breached the 2005 contract. Spireon filed a motion for summary judgment, arguing that as a matter of law, the 2010 amended agreement controlled.

The court denied the motion, finding a disputed fact issue as to whether Schumacher assented to the new terms. According to the court, there was no evidence that anyone other than Wells had authority to access the portal. But there was no evidence in the record that Wells had actually done so. In other words, the mere fact that someone accessed the portal did not, in itself, establish that Schumacher or his authorized agent did so.

The ruling does not invalidate the concept of “clickwrap” agreements generally. But it serves as a reminder that you’d better have the evidence that an authorized user assented to the terms before you try to enforce it.

Special thanks to SWEL student, Kathryn Macon, for her assistance on this edition.