Hines v. Overstock.com: Notice of Browsewrap Terms Must be Conspicuous


As the volume of online transaction activity continues to grow, it is not surprising that so called “browsewrap” agreements – essentially, terms and conditions that a site user is presumed to have agreed to merely by accessing a website — have garnered more scrutiny by consumers and, ultimately, within the courts.  What is surprising is that website operators continue to overlook basic elements to ensure that such agreements are enforceable.  The recent case of Hines v. Overstock.com, Inc., Case 1:090-CV-00991-SJ-RLM (Sept. 8, 2009  E.D.N.Y.), is a case in point.

 Context

Ms. Hines purchased a vacuum cleaner through Overstock’s website and upon later returning it was charged a restocking fee.  Upon objecting to this charge, Overstock pointed to the Terms and Conditions posted on its website, which included the statement that “Entering this Site will constitute your acceptance of these Terms and Conditions” – notwithstanding that a user has to actually visit the Terms and Conditions to become aware of this statement.  The same with a mandatory arbitration clause buried within the Terms, which specified Salt Lake City, Utah as the place of arbitration.  The Hines court regarded Overstock’s contentions with skepticism and ultimately determined that the placement of the Terms and the configuration of the website’s purchasing process worked against Overstock.

Common Sense vs. Hindsight?

In hindsight it may seem readily apparent that it would be unfair to hold a site user accountable for website terms, such as a mandatory restocking fee or an arbitration clause, about which the user was not made aware prior to completing a transaction through the site.  Many websites have traditionally posted somewhere on them “Website Terms” or the like with the expectation that such terms provide a measure of protection even if a site user never actually visits those terms.  For sites that are principally informational in nature, basically, an online brochure, this has long been regarded as sufficient.  However, the more interactive a site is, es[ecially if a transaction of any sort is being conducted, requiring some affirmative assent to the website terms by the site user is imperative if the site operator is to have a realistic expectation of enforcing those terms. 

Most of this seems common sense in terms of basic procedural fairness, which dictates that some meaningful notice have been provided.  Website operators have a great deal of latitude in terms of how they contract with their users and many of the procedural battles over the enforceability of online contracts have long ago been decided on traditional contract principles despite the online context.  On the Overstock site the Terms and Conditions were posted at the bottom of the site and below the fold or the typical viewer window and required a user to scroll down to even take notice that the terms were present.  During the purchasing process, although several screens prompted various responses or information from Ms. Hines at no point was she prompted to acknowledge the Terms themselves.  Thus, as the Hines court noted “[v]ery little is required to form a contract nowadays – but [the Overstock notice procedure] alone does not suffice.”

The Takeaway

So, website operator beware!  If you use  a browsewrap agreement without more for important terms upon which you expect to rely in the event of a dispute, you are taking a big risk.  Unless you can show some evidence of actual notice of the website’s terms by the user, the user will likely be able to skate by without liability because of insufficient notice.  While this is much clearer for transaction-oriented websites, it will likely tilt that way for purely informational sites as well.

 Link to DecisionHines v. Overstock

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