The design of websites has increasingly moved towards aesthetically pleasing, clean looking web pages.  Web browsers and shoppers particularly do not want to be burdened by pop-up ads or web pages overcrowded with information, such as legal jargon or terms of use or privacy policies.

However, for those of you with e-commerce sites operating in the U.S., there was a recent decision by the U.S. District Court in California, NGUYEN v. BARNES & NOBLE, INC., on browser-wrap agreements that you should pay attention to.

According to the decision by the Court, Nguyen had seen an advertisement for 16GB HP TouchPad Tablets being sold for $99 USD. He purchased two of these tablets for a reduced price of $99.99 USD; the former price was $399.99 USD. One can imagine the demand this price drop caused for the online electronic retailer.  Barnes & Noble’s supply couldn’t meet the demand; and they ended up selling tablets they couldn’t offer.

Nguyen ultimately received a confirmation of his order, but eventually Barnes & Noble reneged on their obligation citing their web site’s term of service agreement. Nguyen launched a class action, and Barnes & Noble relied on their arbitration clause in the terms of service to force the matter to arbitration and avoid the class action suit.

However, in this situation, the court found that Barnes & Noble didn’t provide adequate “notice” to their terms of service during checkout. According to the court, there was no assent to the terms, meaning he was never asked to click “yes” to agree to the terms and conditions (referred to as a browsewrap agreement in the judgment), and as such Nguyen, the Court said, never agreed to be bound by the terms and conditions.  All that was on the site was a link to their terms at the bottom of the page, and this was not sufficient notice.

This decision will allow Nguyen to pursue a class action suit in this matter.

The dilemma now is maintaining a clean looking webpage, all the while legally protecting your website especially for e-commerce activity. Essentially, a great looking website where the terms are hidden or referred to without assent will not be legally safe for both the customer and company.  We also know that just a link to the Terms of Service at the bottom of the web page will not be sufficient. What is not clear is whether the Terms of Service needs to be displayed in order for there to be assent.

Many sites, have a link to the Terms of Service, and if you click signup, you then agree to those Terms of Service. On the Apple Store, for example, when making a purchase, there is on the sidebar a note that says, “By clicking Continue, you acknowledge that the terms of Apple’s Sales and Refunds will govern your purchase.” It is in a box with the heading Order Summary, but it is not in the main window of the screen. Would that be enough notice of their Terms of Service to say that an Apple customer was bound to the agreement.

Let’s consider Twitter’s signup process. When you sign up for a Twitter account, in their signup there are Terms of Use immediately displayed, in an expandable window, just above their “Create My Account” button, with the option to print them out.  This is probably the safer and closer to the type of assent the courts were looking for. The safest, and what the courts have upheld, is where the whole Terms of Use is displayed, as you would see on installing a desktop application and then asking your customer to accept them.

It is important for websites to achieve this balance that Barnes & Noble was unable to achieve.  To be safe, you should consider including an explicit agreement of your Terms of Service as a condition of purchase and be part of the purchase contract irrespective of your design scheme. And to make it sure there is proper agreement from the customer, make sure you have the user click to agree, or checks a box.

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  • Chris Lutka

    When you sign up for an account on most websites, you are asked to agree to the terms and conditions, usually up-front and clear, before your account is activated. Playing devil’s advocate, I may have to side on B&N for this one.

  • Robbin Hood

    Class action lawsuits or not, pissing people off so they don’t do business with you will hurt more.

  • When it comes right down to it, are the long pages of fine print (a la Apple) really defensible either? We all know almost nobody reads them. Has that been challenged in court?

    (I wonder if your browser records could be entered as proof that you didn’t click and read the agreement?)

    One might also argue that you agree to them under duress — it is often the only way you can get the product or service you are trying to purchase. So is that legit?

    How about we start with “plain English” agreements, so those who want to read them can actually understand them without going to law school?

  • Nick C

    B&N require you register.
    Surely, reading their terms of use for the website and purchasing rules at the point of registering would make more sense.
    Force the user to scroll through the whole agreement before continuing with registration with options to print, pdf etc.
    Now make reference to that agreement whenever a purchase is being made with a check box.

    On a side note, running out of product is bad business. Typos in pricing is just poor website editing.

    Look to your staff [website content managers, legal team and so on] and not the customer.

    B&N should ask What would Amazon Do?
    [WWAD] 🙂