I Accept: A New Approach to the Enforceability of Electronic Contracts

August 7, 2019

More than 20 years ago, Judge Easterbrook warned against treating disputes in cyberspace as a unique section of legal studies and litigation. [1] With due respect to this position, the development, expansion, and proliferation of the Internet in general, and e-commerce in particular, have forced businesses (as well as their counsel) to “change with the times” and adjust their approach to addressing certain legal issues. The recent decision in Nicosia v. Amazon.com [2] demonstrates that the enforceability of online agreements is still a robust area of study.

Photo with article quote: The recent decision in Nicosia v. Amazon demonstrates that enforceability of online agreements is still a robust area of study.

Nicosia arose from a dispute over what is known as a “hybridwrap agreement.” [3] Hybridwrap agreements require users to manifest assent to terms, usually by clicking a button that might be labeled “Continue” or “Place order.” Like browsewrap agreements, hybridwrap agreements present a hyperlink to the terms instead of displaying them on the screen. Courts will only enforce a hybridwrap agreement if users receive reasonably conspicuous notice of the terms. This is typically achieved by placing a clear notice directly next to the button, indicating that, by clicking the button, users agree to the terms of the agreement.

Nicosia focused on whether the plaintiff had agreed to Amazon’s Conditions of Use, which were presented as a hybridwrap agreement on the site’s checkout page. Following precedent on hybridwrap agreements, Judge Glasser considered the visibility and proximity of the notice in relation to the “Place your order” button on the checkout page. He found that, although the notice was not directly next to the button on the checkout page, the layout of the hybridwrap agreement on the initial Amazon sign-up screen provided the plaintiff with notice of the Conditions of Use.

In addition to evaluating the reasonable conspicuousness of the notice, Judge Glasser conducted a deep inquiry into the reality of modern e-commerce, and suggested that the traditional approach of evaluating reasonable notice and manifestation of assent no longer made sense in light of modern e-commerce practices. Instead, Judge Glasser observed that those that transact business with merchants electronically tend not to review the applicable terms and conditions, and despite not doing so, knowingly and willingly submit themselves to those terms. As such, and subject to fundamental consumer protections, Judge Glasser suggested that courts should instead evaluate only whether the terms themselves are reasonable. Using this approach, courts would hold users to all terms that are not objectively unreasonable, and would no longer focus on the layout of webpages or the methods of assent.

Does Judge Glasser’s approach signal a watershed? Online merchants (and their attorneys) should monitor court activity for indications that Judge Glasser’s specialized approach to online contracts may be gaining traction.

[1] Easterbrook, Frank H., “Cyberspace and the Law of the Horse.” University of Chicago Legal Forum (1996).
[2] 2019 U.S. Dist. LEXIS 100162, 2019 WL 2482674 (E.D.N.Y. Jun. 14, 2019).
[3] These agreements are an amalgam of “clickwrap agreements” (which display the terms and require users to manifest affirmative assent), and “browsewrap agreements” (which only include a hyperlink to the terms at the bottom of the screen and do not require users to affirmatively assent). Courts generally will not enforce browsewrap agreements —because a user cannot manifest assent to terms that are not often conspicuous—but will enforce clickwrap agreements that are afflicted with these limitations.
Separator line

If you have questions concerning this topic, or would like to discuss in further detail, please contact Jeffrey Harradine.

Authors: Jeffrey Harradine, Haylei John (2019 Summer Associate, Cornell Law School Class of 2021)

Disclaimer: This legal update is provided for informational purposes only and should not be construed as legal advice. Receipt of information presented on this site will not create an attorney-client relationship. No user of this site should act or refrain from acting on the basis of information included on this site without seeking legal advice of counsel in the relevant jurisdiction. This website contains attorney advertising. Prior results do not guarantee a similar outcome.