Tag Archives: browsewrap

Forum selection clause in browsewrap agreement did not bind parties in bitcoin fraud case

We all know that clickwrap agreements are preferable to browsewrap agreements, assuming, of course, the objective is to establish binding contracts between participants in online transactions. Nonetheless, some online platforms still (try to) rely on browsewrap agreements to establish terms of service. That avoidance of best practices gives us situations like the recent case of Hussein v. Coinabul, LLC, in which a federal court in Illinois refused to enforce a forum selection clause in a “bitcoin to gold marketplace” browsewrap agreement.

Plaintiff alleged that he sent about $175,000 worth of bitcoins to defendants in June 2013, expecting to get gold in return. (Plaintiff alleges he transferred 1,644.54 BTC. The average exchange value in June 2013 was $107.82/BTC. You can get historical bitcoin price data here: http://www.coindesk.com/price) When the gold never arrived, plaintiff sued for fraud.

Defendants moved to dismiss, citing a forum selection clause contained in a browsewrap agreement found on its website. That purported agreement required all disputes to be heard in the state courts of Wyoming, and for Wyoming law to apply. The court denied the motion to dismiss, finding that the browsewrap agreement afforded plaintiff neither actual nor constructive knowledge of its terms and conditions.

The court observed that the hyperlink that directed users to defendants’ Terms of Service was listed among ten other hyperlinks at the bottom of each page. (See this Wayback Machine capture of the website from June 2013).

As for lack of actual knowledge, the court credited plaintiff’s allegations that he did not review or even know of defendants’ Terms of Service when he entered the bitcoin transaction. And there was no evidence to the contrary in the record.

And as for lack of constructive knowledge, the court found that the hyperlink, “buried at the bottom of the webpage – [was] without some additional act of notification, insufficient for the purpose of providing reasonable notice.”

Hussein v. Coinabul, LLC, No. 14-5735, 2014 WL 7261240 (N.D. Ill. December 19, 2014)

Court enforces online terms and conditions incorporated by reference in invoices

Clickwrap and browsewrap agreements are not the only enforceable online contracts.

Fadal Machining Centers, LLC v. Compumachine, Inc., 2011 WL 6254979 (9th Cir. December 15, 2011)

Plaintiff manufacturer sued one of its distributors over unpaid invoices. Defendant moved to dismiss, citing to an arbitration provision in the terms and conditions on plaintiff’s website. The district court dismissed the complaint and plaintiff sought review with the Ninth Circuit. On appeal, the court affirmed.

It held that the district court did not err in concluding an arbitration agreement existed between the parties. Though the language of the hard copy distribution agreement did not address arbitration, it provided that plaintiff could unilaterally establish terms of sale from time to time. Each invoice referred to plaintiff’s website’s terms and conditions. The court found that these referred-to terms and conditions “clearly and unmistakably delegated the question of arbitrability to an arbitrator.”

The decision supports the notion that contracting parties (particularly merchants selling goods) may rely on provisions not spelled out in any documents exchanged between them, but appearing online and incorporated by reference. In other words, certain online contracts other than clickwrap and browsewrap agreements may be enforceable.

Browsewrap website terms and conditions enforceable

Major v. McAllister, — S.W.3d —, 2009 WL 4959941 (Mo. App. December 23, 2009)

The Missouri Court of Appeals has issued an opinion that reflects a realistic grasp of how people use the web, and also serves as a definitive nod to self-responsibility. The court refused to accept a website end user’s argument that she should not be bound by the website terms and conditions that were presented to her in the familiar “browsewrap” format.

Click

Ms. Major used a website called ServiceMagic to find some contractors to remodel her home in Springfield, Missouri. Each page she saw during the process had a link to the website terms and conditions. At the point where she submitted her contact information to facilitate the signup process, she was presented with a link to the website’s terms and conditions. We’ve all seen this countless times — the link read, “By submitting you agree to the Terms of Use.”

Major admitted she never clicked on the link and therefore never read the terms and conditions. But had she clicked through she would have read a forum selection clause providing that all suits against ServiceMagic would have to be brought in Denver, Colorado.

When Major sued ServiceMagic in Missouri state court, ServiceMagic moved to dismiss, citing the forum selection clause. The trial court granted the motion and Major sought review. On appeal, the court affirmed the dismissal.

Major relied heavily on Specht v. Netscape, 306 F.3d 17 (2d Cir. 2002). The court in Specht held that end users of Netscape’s website who downloaded a certain application were not bound by the terms and conditions accompanying that download because the terms were not visible on the screen without scrolling down to see them.

But in this case the court found the terms and conditions (including the forum selection clause) to be enforceable. In contrast to Specht, the ServiceMagic site did give immediately visible notice of the existence of the terms of the agreement. Even though one would have to click through to read the terms, the presence of the link was sufficient to place the website user on reasonable notice of the terms, and subsequent use by the end user manifested assent to those terms.

Click image courtesy Flickr user smemon87 under this Creative Commons license.