ecommerce via maria elena on flickr creative commonsTerms of Use Agreements (TOU) are important to any entity that conducts business via the Internet. TOU provisions contain, usually, items like limitations on acceptable use of a website or app, site participant conduct and in e-commerce applications, important limitations of liability, warranty exclusions, and dispute resolution terms. Generically speaking, TOU documents usually contain the “fine print.” As such, TOU are intended to be contractual terms detailing the rights and responsibilities of the parties. However, contract terms are only binding if they are agreed-to and a recent decision in California has cast doubt on the enforceability of one widely used form of TOU on e-commerce sites.

Types of TOU Agreements

There are two general ways that a website may present TOU to a site user. First, most websites use what are known as “Browserwrap” TOU. In this scenario, TOU language is usually provided on a separate page of the site accessible by a static link. A second way a TOU is presented is via “Clickwrap.” A Clickwrap TOU generally presents itself to a site user as a pop-up window or new webpage that details all the terms and requires the user to click a button, check a box or perform some other action manifesting assent to the TOU.

Nguyen v. Barnes & Noble

In 2011, Barnes & Noble (B&N) offered a sale of heavily-discounted touchpad tablet computers. Plaintiff Ngyuen ordered two tablets via the website. However, B&N was so inundated with orders for the tablets that it could not meet demand. Thus, it cancelled Plaintiff’s order. Plaintiff sued alleging B&N engaged in various deceptive trade practices and false advertising. Upon service of the suit, B&N moved to compel arbitration of the dispute arguing that according to the TOU all consumers agreed to mandatory arbitration.

The TOU on was provided by Browserwrap–published on a page separate from the main e-commerce site and via a static link on every page. The TOU itself stated that a consumer’s use of the website constituted an acceptance of the TOU and bound the consumer to the terms of same. However, even though the TOU contained these terms, they were not specifically brought to the consumer’s attention at any time. The consumer had to hunt them out. Based on this, Plaintiff argued the arbitration clause was not enforceable against him because absent specific knowledge of the term and explicit agreement to same it was not part of the contract between the parties.

The Ninth Circuit Court of Appeals agreed with Plaintiff. While Clickwrap TOU generally becomes part of a contract with a web user, Browserwrap TOU will only become part of the contract if the user had either actual or constructive knowledge of the TOU. Constructive knowledge, however, requires more than just a static link to a Browserwrap TOU on a separate web page. To determine if a Browserwrap TOU sufficiently puts a web user on notice requires analyzing, among other things, the website’s design, placement of the TOU link and prominence of same. The more the TOU resemble a Clickwrap agreement, the greater the likelihood those TOU will be enforceable. In the Barnes and Noble case, Plaintiff had no actual notice of the TOU and the simple static placement of a TOU link on the site did not constitute sufficient constructive notice of those terms, the court determined the TOU and the arbitration provision were not enforceable.

What This Means

While the Nguyen case may not be a death knell for Browserwrap TOU agreements, it does indicate that these agreements must do more than simply reside behind static links buried among other content on a website. Indeed, the case suggests that businesses engaged in e-commerce (even if B2B e-commerce) the more conspicuous the TOU are, the better. Clickwrap would be the ideal solution but a Browserwrap agreement can work, if the site containing it is designed appropriately.

Though this decision is very recent, it may signify a shift in the law that presents an opportunity for companies to review their websites to ensure enforceability of Terms and Conditions. If you would like to discuss any issues related to your website or e-commerce efforts, please feel free to contact me at

Image courtesy of Maria Elena under Flickr Creative Commons License