Facts

Netscape offered its SmartDownload plug-in free of charge. Users saw and could press a prominent “Download” button. The licence terms, including an arbitration clause, were not displayed before or beside that button. A reference to the licence appeared only lower on the page, beyond the initially visible screen, and could be found only by scrolling.

The plaintiffs alleged that SmartDownload transmitted information concerning their internet file-transfer activity. Netscape sought to compel arbitration on the theory that downloading the software bound users to the licence.

Issues

Would a reasonably prudent internet user have inquiry notice of the licence? Did clicking “Download,” without a statement that the click signified agreement, objectively manifest assent to arbitration?

Court’s reasoning and holding

The Second Circuit affirmed refusal to compel arbitration. Ordinary contract principles applied online: a party is not bound by inconspicuous terms of which the party had neither actual knowledge nor reasonable notice. The visible invitation was to download free software, not to agree to a licence. Users could complete the download without seeing the notice.

The court distinguished conventional click-wrap designs that require a user to press “I Agree” after receiving notice. The bare act of downloading could not be treated as unambiguous consent to hidden terms.

Facts

Lawrence Feldman purchased advertising for his law firm through Google AdWords. Before activating the account, the interface displayed the agreement in a scrollable window and instructed the user to read the terms. A user had to click a button indicating acceptance before proceeding. The agreement included a forum-selection clause requiring disputes to be adjudicated in Santa Clara County, California.

Feldman alleged that he was charged for invalid or fraudulent clicks on his advertisements. He resisted the forum clause, arguing in substance that the agreement had not been negotiated and that he had not read it.

Issues

Was the online AdWords agreement an enforceable click-wrap contract? Could a user who affirmatively accepted avoid the forum-selection clause by saying the terms were not actually read?

Court’s reasoning and holding

The court treated the process as a valid click-wrap arrangement. The user received a reasonable opportunity to review the terms, the terms were printable and storable, and the account could not be opened without an affirmative acceptance. Contract law ordinarily binds a person who assents after an opportunity to read; actual reading of every clause is not required.

The forum-selection clause was enforced and the dispute was transferred to the Northern District of California.

Facts

Brett Long bought a floral arrangement from ProFlowers.com and alleged that an item advertised as assembled arrived as a do-it-yourself kit. Provide Commerce relied on an arbitration clause in its Terms of Use.

The terms were accessible through a capitalised and underlined footer link. Yet the link appeared in light-green text against a lime-green background, sat among numerous other links and was not connected by any conspicuous statement to the act of submitting an order. Long did not have to open the terms, tick a box or otherwise affirm agreement.

Issues

Did Long have actual or constructive knowledge of the terms? Did completing the purchase unambiguously manifest assent to the arbitration and forum clauses?

Court’s reasoning and holding

The court affirmed denial of arbitration. There was no evidence of actual knowledge, and the overall design did not place a reasonably prudent internet user on constructive notice. In browse-wrap, notice carries unusual weight because assent is inferred rather than expressly collected.

Merely completing an order did not communicate agreement to terms that were not reasonably presented.

Facts

Spencer Meyer registered for Uber on a smartphone. The payment screen displayed a “REGISTER” button and, immediately below it, a statement that creating an account meant agreement to the Terms of Service and Privacy Policy. The terms were hyperlinked.

Meyer later alleged unlawful price fixing by Uber and its former chief executive. Uber moved to compel arbitration. The district court found the notice insufficient; Uber appealed.

Issues

Did the mobile registration screen provide reasonably conspicuous notice? Did pressing “REGISTER” unambiguously manifest assent to the arbitration clause?

Court’s reasoning and holding

The Second Circuit evaluated the screen as a whole. The notice was directly below the button, the screen was uncluttered, the relevant content was visible without scrolling and the hyperlink was distinguishable. A reasonably prudent smartphone user would understand that registration was conditioned on agreement to the linked terms.

Pressing “REGISTER” therefore manifested assent. A separate checkbox was not indispensable where notice and action were clearly connected.

Facts

ProCD compiled information from thousands of telephone directories and sold the resulting database on CD-ROM. It charged different prices for consumer and commercial use. The outside packaging indicated that the software was subject to an enclosed licence; the licence appeared in the manual and on-screen when the program ran.

Matthew Zeidenberg bought the consumer version, disregarded the non-commercial-use restriction and made the database available through an online service. ProCD sued for breach of the licence.

Issues

Could licence terms supplied inside the box become part of the contract? Was acceptance possible through use and retention after the buyer had an opportunity to review and return the product?

Court’s reasoning and holding

The Seventh Circuit held that shrink-wrap terms were not invalid merely because the buyer saw the full terms after purchase. A transaction may be structured so that the vendor proposes detailed terms with the product and the buyer accepts by retaining or using it after an opportunity to reject and return.

The licence was enforceable unless defeated by ordinary contract objections such as illegality or unconscionability. The case was reversed and remanded in ProCD’s favour.

Facts

Trimex, a Dubai-based minerals trader, sent Vedanta a commercial offer by email on 15 October 2007 for Australian bauxite. Vedanta communicated acceptance on 16 October for five shipments. Trimex relied on the acceptance by entering supplier and shipping arrangements.

Representatives later signed minutes acknowledging the transaction. A more detailed formal contract containing an arbitration clause was exchanged with proposed modifications. Vedanta subsequently sought to defer shipments and disputed that any concluded contract or binding arbitration agreement existed. Trimex applied under Section 11(6) of the Arbitration and Conciliation Act, 1996.

Issues

Did the email exchange conclude a contract despite the absence of a final signed instrument? Were essential terms still open? Did a binding arbitration agreement exist?

Court’s reasoning and holding

The Supreme Court read the correspondence as a commercial sequence. The offer identified essential matters, Vedanta accepted five shipments, later conduct was consistent with a concluded bargain and Trimex had acted on that acceptance.

Contemplation of a more detailed formal document does not undo an existing contract unless the parties intended signature of that document to be a condition of formation. A contract can be gathered from multiple communications. The Court held that a binding contract and arbitration arrangement existed and appointed an arbitrator.