A recent U.S. Court of Appeals decision (Ninth Circuit, August
18, 2014) is a reminder to any of us seeking to impose contractual
terms on our website users and online customers. Nguyen sued
Barnes & Noble in federal court, but Barnes &
Noble was seeking to enforce the arbitration clause in their
website terms and conditions, to move the proceedings out of the
The case arose from the liquidation by Barnes & Noble
of its inventory of discontinued HP "Touchpad" tablets,
which were an unsuccessful competitor to the iPad.
Barnes & Noble advertised the fire sale of Touchpads at
a heavily discounted price. Nguyen acted quickly and
purchased two units on their website and received an email
confirming the transaction. But the following day he received
another email from Barnes & Noble informing him that his
order had been cancelled due to unexpectedly high demand.
Nguyen's lawsuit alleged that Barnes & Noble had
engaged in deceptive business practices and false advertising.
Barnes & Noble asked the court to move the action from
federal court to the arbitration under their terms and
There was no explicit acceptance by Nguyen of the website terms,
and therefore the contract, if there was one, was considered a
The court summarized the differences between clickwrap
agreements, where users explicitly click "I agree" or
otherwise clearly accept the terms, and browsewrap agreements where
a website's terms and conditions are posted on the website and
a user is found to give their consent simply by using the site.
However, since no affirmative action is required by a website
user to agree to the terms under a browsewrap agreement, a
determination of whether it binds the user depends on whether the
user has actual or constructive knowledge of its terms and
In this case there was no evidence that Nguyen had actual
knowledge of the website terms, and so the question was whether the
website put a reasonably prudent user on notice of the terms.
The court looked at prior decisions which provided some
guidance. For example, where the link to the website terms is
buried at the bottom of the page or tucked in obscure corners of
the site, courts are unlikely to enforce the browsewrap
agreement. However, if a website contains an explicit textual
notice that continued use will act to indicate the user's
intent to be bound by the terms, then the courts are more amenable
to enforcing the browsewrap agreement.
Barnes & Noble argued that their terms and conditions
were sufficiently brought to the attention of users by a hyperlink
at the bottom left corner of every page on their site, and in close
proximity to the buttons that a user must click on to complete a
But the court found that the proximity or conspicuousness of the
hyperlink alone is not enough to give rise to the required
available via conspicuous link on every page but otherwise provides
no notice to users nor prompts them to take any affirmative action
to demonstrate acceptance, then even close proximity of the
hyperlink to the relevant buttons, without more, is insufficient to
give rise to constructive notice.
The striking result in this case is that it is unclear how any
website operator or online merchant can be certain that a user is
bound by the website terms, absent clear acceptance through some
affirmative action. Aside from terms and conditions found at
a website, we must also wonder whether other provisions such as a
Despite this case being a fairly high level American decision,
Canadian companies, especially those doing business in USA, should
pay close attention to the ruling, and indeed a Canadian court
could come to a similar result.
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guide to the subject matter. Specialist advice should be sought
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Software license agreements generally require the customer to pay fees for the software license and related services, which fees are usually based upon the duration of the license and the manner in which the customer is allowed to use the software, together with applicable taxes and withholdings.
In less than nine months, on July 1, 2017, persons affected by a contravention of Canada's anti-spam legislation will be able to invoke a private right of action to sue for compensation and potentially substantial statutory damages.
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