Monday, June 13, 2011

In E-commerce, Size Doesn't Matter (but placement sure does)

Are "browse wrap" agreements enforceable?  "Browse wrap" agreements are those website terms and conditions that purport to bind people that surf on the website.  A recent New Jersey appellate court had the opportunity to rule on the enforceability of these purported contracts.

In Hoffman v. Supplements ToGo Management, LLC, the New Jersey appellate court was presented with an interesting situation.  Briefly, Hoffman (a New Jersey resident) bought a bottle of "Erection MD" brand supplements allegedly advertised, among other things, to "enhance sex drive."  He then sued Supplements ToGo and World Class Nutrition, LLC for false advertising in a class action suit.  The defendants moved to dismiss the suit on the basis that their website included a forum selection clause requiring all litigation to take place in Nevada.  The trial court found that the forum selection clause was sufficiently prominent on the defendant's website to be enforceable and dismissed the case.  Hoffman appealed.

On appeal, the appellate court disagreed with the trial court and found that the defendant's website was structured so that buyers were not provided with reasonable notice of the forum selection clause.  Now this is the part of this case that I find truly interesting. The trial court judge and the appellate judges looked at the same website (presumably) and came to different conclusions about whether a consumer would have adequate notice of the terms on the web page.  So I decided to look at the World Class Nutrition (WCN) website myself.

Here is a snap-shot of WCN website using my default settings in Internet Explorer.

Here is a snap-shot of the WCN website using my default settings in Fire Fox.

In looking at these, you should be aware of a few things.  First, they are no where near the size you would see in your browser.  Second, they were taken recently and may have changed since the facts in the case.  Third, I've highlighted the forum selection clause to make it more prominent.

In both snap-shots, however, look at the relative position of the scroll bar on the page.  Note how far down on the page a user would have to scroll in order to see the forum selection clause.  This is the issue that the court found to be important.

The appellate court thought that the fact that the term appeared "submerged" (i.e., at a place on the page that the user would have to scroll down in order to see it) made a key difference.  In print media jargon, one might refer to this placement as being "below the fold."  This placement, when combined with the fact that customers were capable of placing the item in their virtual shopping cart without having to scroll down to see the clause, made the clause unenforceable.  The appellate court made a point of emphasizing that the size of the print was not, necessarily, an issue.  The court discussed a 1999 case (Caspi v. Microsoft Network, LLC, 323 N.J. Super. 118) at length and specifically noted that, in that case, there was "nothing extraordinary about the size or placement of the forum selection clause text."  Caspi, 323 N.J. Super. at 125.  In Caspi, there was a click-wrap agreement that the user was required to scroll through and click "I Agree" in order to proceed with the transaction.  The Caspi case stood for the proposition that for the forum selection clause to be enforceable, it had to be presented in a "fair and forthright fashion." 

The "fair and forthright fashion" standard is all well and good.  But as a practical manner, how does a website programmer apply it to ensure that the clause will have its intended goal?  From Caspi, we know that a click wrap agreement should work.  In the Hoffman case, there was no click wrap agreement.  Once a buyer placed the item in their virtual shopping cart, the user was linked to another page which did not contain the disclaimer and this made all the difference.

The moral of this story for e-commerce vendors and website developers is first, use click wrap agreements.  Second, if your not going to use a click wrap, make sure that at least your forum selection clause (and probably the rest of your terms) are not "submerged" (i.e., are presented above the fold) before a buyer can proceed with his/her purchase transaction.