Take Care In Structure and Placement of Online Agreements

Last month, the Court of Appeals for the Second Circuit overturned dismissal of a lawsuit brought against Amazon.com.  At the heart of the litigation was the question of whether the plaintiff had agreed to a mandatory arbitration clause that was embedded in Amazon’s terms of use.  The trial court had dismissed the lawsuit, finding that plaintiff Nicosia had agreed to the arbitration clause.  Writing for a unanimous panel, Judge Chin did not decide whether there had been agreement to the terms but found that reasonable minds might disagree on that question.  “To be clear, we do not hold that there was no objective manifestation of mutual assent here as a matter of law. Rather, we conclude simply that reasonable minds could disagree on the reasonableness of notice.”  Before reaching this conclusion, Judge Chin recited the growing body of law that underscores the need for clarity of assent to online terms.  This can be a crucial issue for websites offering commercial transactions, such as the sale of goods or services.  When drafting terms of use and contract terms for websites, take care not only in the terms themselves but also in assuring they are prominent on the site and require affirmative agreement by customers.  Read the Nicosia vs. Amazon opinion here:  nicosia-v-amazon.