Paul Peter Nicolai
Accessing Website May Be Agreement to Arbitrate
Updated: Jan 3
According to one federal appellate court, just visiting a website may be consent to a binding arbitration agreement. A retailer contended a reference on the back of the cards to an arbitration provision on its website was sufficient to bind card purchasers. Saying the case turned on unresolved factual questions over whether the consumers had agreed to arbitrate simply by logging onto the retailer’s website, the appellate court reversed a denial of the retailer’s motion to compel arbitration and remanded for further proceedings.
The plaintiffs purchased gift cards made worthless after third parties tampered with them. They sued the retailer for refusing to refund the purchase price. The retailer moved to compel arbitration. The back of each gift card told consumers to see a website for complete terms, which included an agreement to arbitrate
The appeals court reversed and remanded for trial on the issue of whether an agreement to arbitrate existed. The appeals court rejected the retailer’s theory that the parties had a binding arbitration agreement when the plaintiffs purchased their gift cards. The retailer argued the notation on the back of the cards directing the customer to the website created a binding contract. The court disagreed because the arbitration provision said a purchaser accepts arbitration only by using or accessing the site.
The court said the material question was whether the plaintiffs agreed to arbitrate by accessing the website. A browse-wrap arrangement imputes assent through performing a specific act, like website use or access. The issue for trial was whether the website put a reasonably prudent user on inquiry notice of the terms. This issue could only be decided if sufficient proof existed that any plaintiffs used or accessed the website.
WHY THIS IS IMPORTANT... This case allows companies to be less vigilant about providing consumers with notice of binding terms by possibly lowering the standard for effective notice.