What makes an on-line arbitration agreement binding against a website user? In Meyer v. Uber Technologies, Inc., 2017 U.S. App. LEXIS 15497 (2d Cir. Aug. 17, 2017), the U.S. Court of Appeals for the Second Circuit issued a second decision on this issue, providing additional elucidation following its 2016 decision in Nicosia v. Amazon, Inc. 834 F.3d 220 (2d Cir. Aug. 24, 2016).The Nicosia and Meyer cases each involved an on-line agreement with a user who claimed not to have read the company’s terms and conditions, including an arbitration clause. In Meyer, Uber’s agreement to arbitrate was held to be enforceable against the user; in Nicosia, Amazon’s was not—at least on the record before the Court of Appeals.
In each case, the foundation principle was that “parties are not required to arbitrate unless they have agreed to do so.” In each case the user had, at some point, clicked an online button that the company maintained constituted an acceptance of “terms and conditions.” And in each case, the user claimed not to have read the terms and conditions. To determine whether a binding contract had been formed, the court evaluated whether the users had “inquiry notice” of the arbitration terms and conditions when they respectively clicked “Register” (in the Uber app) and “Place Your Order” (on the Amazon web page).
Regardless of the characterization of the “agreement” as click-wrap, browser-wrap, or a hybrid, basic principles of contract formation were at issue in each case. To form a contract, there must be mutual manifestation of assent. Where a party has inquiry notice of terms, the party’s act of accepting terms binds it even if the party has not read those terms. Inquiry notice means sufficient information has been provided such that a reasonably prudent person would investigate the matter further. (Black’s Law Dictionary, 7th ed. 2000.) The court explained in Nicosia: “an offeree is still bound by the [arbitration] provision if he or she is on inquiry notice of the term and assents to it through the conduct that a reasonable person would understand to constitute assent.” Nicosia, 834 F.3d at 233. In Meyer, the court stated: “Whether or not there is inquiry notice depends on the ‘[c]larity and conspicuousness of arbitration terms,’ …; in the context of web-based contracts, … clarity and conspicuousness are a function of the design and content of the relevant interface.” Meyer, 2017 U.S. App. LEXIS 15497 at *14.
Designers of websites can glean guidance from the two decisions:
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Reduce clutter. The primary difference between Uber’s contract and Amazon’s, as described in the two decisions, was the degree of on-line page clutter
- Uber’s screen to complete a user’s registration was...
