On December 19, 2014 in the matter of Hussein v. Coinabul LLC, the U.S. District Court for the Northern District of Illinois held that a company selling gold for Bitcoin online could not enforce its forum selection clause because it never directed customers to its terms of services link containing the provision.

Specifically, the court held that users did not have actual or constructive knowledge of the clause because they could browse the entire website, create an account and place an order without ever viewing or being told to view the terms of service.

It is well established that courts will uphold clickwrap agreements where Internet users take an affirmative action to assent to the terms, such as clicking on a checkbox or hyperlink.  However,  browsewrap agreements require no manifestation of assent and are only enforceable if a user actually knew or, by prudent action, reasonably should have known of the terms.

Here, Coinabul’s website did not require customers to affirmatively assent to its terms and conditions, including forum selection and choice of law clauses.  Rather, at the bottom of every page of the Coinabul website were a collection of links including one labeled “Terms of Service.”  There was no indication that one hyperlink was more important than the others.

The ruling that Coinabul could not enforce the clause because it could not show that Hussein had actual or constructive knowledge of the terms of service is consistent with the recent ruling by the Ninth Circuit U.S. Court of Appeal in Nguyen v. Barnes & Noble Inc. (in the absence of a prompt that requests users to affirmatively acknowledge the Terms of Use, a website’s practice of making terms of use available via conspicuous hyperlinks is insufficient to provide notice to users of the actual terms of use).

While, the Ninth Circuit has demonstrated a reluctance to enforce browsewrap agreements, constructive notice of browsewrap terms clearly depends on the site’s design and content.  Here, while the color adequately contrasted with the background, the court stated that some additional act of notification would be necessary to direct users to the hyperlink to provide adequate notice.  In the absence of any such additional act, the court said, the terms were unenforceable.

Contact an experienced eCommerce law attorney to discuss bolstering the enforceability of your website terms and privacy policies.

Information conveyed in this article is provided for informational purposes only and does not constitute, nor should it be relied upon, as legal advice. No person should act or rely on any information in this article without seeking the advice of an attorney.

 

 

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