Courts Indicate Notice of Assent Is Essential
When I was young, my parents told me that if I didn’t know the meaning of a word, I should look it up in the dictionary. That’s how I learned words such as miasma (noxious exhalations from putrescent organic matter), overbearing (domineering; dictatorial; haughtily or rudely arrogant) and pedestrian (a person who goes or travels on foot; walker). Nowadays, printed dictionaries largely have been replaced by online dictionaries. For example, merriam-webster.com claims average monthly page views of 100 million with 25 million unique hits per month. Dictionary.com boasts more than 70 million monthly users worldwide.
By placing an order via this Web site on the first day of the fourth month of the year 2010 Anno Domini, you agree to grant Us a non transferable option to claim, for now and for ever more, your immortal soul. Should We wish to exercise this option, you agree to surrender your immortal soul, and any claim you may have on it, within 5 (five) working days of receiving written notification from gamesation.co.uk or one of its duly authorized minions.
It was reported that on one day alone this prank resulted in the voluntary surrender of 7,500 souls (GameStation later returned these claimed souls). Fox News, commenting that “no one reads the online terms and conditions of shopping,” reported that only 12 percent of the purchasers noticed the clause that contained a link to nullify the transfer (astute shoppers received a coupon for their observation).
The Law & Enforceability
The U.S. District Court for the Eastern District of New York in Nicosia v. Amazon.com, Inc., No. 14-cv-4513 (SLT) (MDG) (February 4, 2015), found that the plaintiff “was, at a minimum, on inquiry notice of the current terms of the Conditions of Use when making his purchases,” and therefore held that the plaintiff agreed to be bound by the mandatory arbitration clause and class action waiver in the Conditions of Use. Nicosia involved a proposed class action by a plaintiff who had purchased a weight-loss supplement containing sibutramine, which it was contended was a “controlled substance … [that has] never been permitted for sale without a prescription from a licensed physician … [and that is] associated with a serious risk of cardiovascular events and strokes.” The Court granted Amazon’s motion to dismiss as the case was deemed subject to mandatory arbitration.
However, in Sgouros v. Transunion Corp. et al., No. 14 C 1850 (JBZ) (February 5, 2015), the U.S. District Court for the Northern District of Illinois denied a motion to dismiss seeking to compel arbitration where the layout and text of the manner of assent was “confusing enough to mislead a user to assume that he was [merely] agreeing to the terms of the Authorization Paragraph” to obtain their personal information, and not to consent to arbitration.
Is mere assent enough to signify that the person has had notice of the terms to which he or she agreed? In May 2011, investment specialist Skandia released a study that showed at least 93 percent of adults conceded that they did not always read full online terms and conditions when signing up for products and services, with 43 percent claiming they do not read them because they are boring and hard to understand. Given the option, most adults (58 percent) would rather read an instructional manual, and 12 percent would prefer to read the phone book. Although 21 percent of the people surveyed acknowledged that they had suffered as a result of agreeing to terms they never read, this attitude continues.
Requirement of Notice
The requirement of notice comes from the court’s scrutiny of contracts to determine whether a contract is one of adhesion that can be voided. Contracts of adhesion are characterized by a lack of bargaining power by one party typically against the drafter. Where unconscionability has been a focus of the legal analysis of enforcement of written contracts of adhesion, the legal analysis of online agreements has focused on whether proper notice was given to the participant.
While courts continue to evaluate the scope of the notices in online agreements to determine their enforceability, it is important for website operators to ensure that notice is adequately given and the terms of such agreements are fairly drafted with no unconscionable surprises.