Contract Law 33 II Sprecht v Netscape (no “clickwrap”)

TL;DR

The case of SP versus Netscape examines the enforceability of click wrap and browse wrap agreements in technology contracts.

Transcript

today we examine a case that deals with contracts in the modern world of technology an Internet contract many of you use web-based services such as Google Facebook or apps on your phone uh uh like Uber or seamless do you remember the last time you read through the terms and conditions of any of those service contracts have you wondered why some Ser... Read More

Key Insights

• 🎁 Click wrap agreements are generally enforceable, but browse wrap agreements must be sufficiently visible to be valid.
• 🫠 Consumers rarely read the terms of click wrap agreements before accepting them.
• 🍉 Cognitive biases, such as term optimism, can affect consumers' understanding of contractual terms.
• 🍉 Disclosure of unexpected and unfavorable terms can help protect consumers in standardized agreements.
• 👮 Courts apply common law to software license transactions, but the Uniform Computer Information Transactions Act (UCITA) could also be relevant.
• 💼 The enforceability of browse wrap agreements is determined on a case-by-case basis, with no clear rules.

Questions & Answers

Q: What is the difference between click wrap and browse wrap agreements?

Click wrap agreements require users to actively accept terms, while browse wrap agreements bind users by continued use of a website or software.

Q: Why did the court rule in favor of the plaintiffs in this case?

The court determined that the plaintiffs were not bound by the hidden arbitration clause because they were not reasonably made aware of its existence during the download process.

Q: What law did the court apply to this software license transaction?

The court applied common law, as the Uniform Commercial Code (UCC) only applies to the sale of tangible goods.

Q: Can browse wrap agreements be enforced?

Browse wrap agreements may be enforced if users are made aware of them and actively consent to their terms.

Summary & Key Takeaways

• Case raises questions about why some service contracts require separate acceptance of terms and conditions.

• Plaintiff downloaded defendant's software program, which included an arbitration clause in hidden terms.

• Second Circuit ruled that users must have clear notice of contract terms for acceptance to be valid.