“Browsewrap” Agreement Found Unenforceable

Before you get all excited, this decision is just one federal district court judge’s opinion. That said, here’s the deal. The Zappos website had a little link at the bottom to its terms of use, which said that, by merely browsing the website, you agree to submit to mandatory binding arbitration of any disputes — like if you had a problem with the big Zappos security breach that potentially affected 24 million consumers. Zappos tried to rely on its browsewrap agreement, but the court said no way.

The arbitration provision found in the Zappos.com Terms of Use purportedly binds all users of the website by virtue of their browsing. However, the advent of the Internet has not changed the basic requirements of a contract, and there is no agreement where there is no acceptance, no meeting of the minds, and no manifestation of assent. A party cannot assent to terms of which it has no knowledge or constructive notice, and a highly inconspicuous hyperlink buried among a sea of links does not provide such notice. Because Plaintiffs did not assent to the terms, no contract exists, and they cannot be compelled to arbitrate.

In order for a contract to be effective, there must be offer and acceptance. You can’t accept an offer if you don’t know about it. Zappos says it will let you browse its website only if you agree to its terms. But that offer is hidden in the terms, and you can browse the website just fine without seeing them. This is definitely the right outcome — let’s hope it becomes a common one and leads to the death of browsewrap agreements. (More likely, it will just result in a lot of pop-up clickwrap/clickthrough agreements, which stand a better chance in court.)

Read How Zappos’ User Agreement Failed In Court and Left Zappos Legally Naked (Forbes Cross-Post) on Technology & Marketing Law Blog (via Boing Boing)