Meyer v. Uber Technologies, Inc.

United States Court of Appeals for the Second Circuit · 2017 · Contracts

ContractsArbitrationOnline contract formationInquiry noticeManifestation of assentFAAarbitration agreementTerms of Service

Facts

Meyer downloaded the Uber App on an Android smartphone in October 2014 and registered for an account by entering personal and credit-card information and then clicking a "REGISTER" button on the payment screen. Directly below that button, the screen stated, "By creating an Uber account, you agree to the TERMS OF SERVICE & PRIVACY POLICY," with the referenced terms shown in blue, underlined hyperlinks. Meyer did not recall seeing or clicking the hyperlink and did not read the Terms of Service, which contained a mandatory arbitration clause. After taking about ten Uber rides, he sued over alleged price-fixing by drivers, and Uber moved to compel arbitration.

Issue

Whether Meyer entered a binding agreement to arbitrate when he registered for Uber through the app, even though he did not read the Terms of Service, where the payment screen advised that creating an account meant agreeing to hyperlinked terms. Also, if an agreement existed, whether the court should compel arbitration without remanding for trial on contract formation.

Rule

Under state contract law governing formation, an online agreement is enforceable when the user has reasonably conspicuous notice of the contract terms and unambiguously manifests assent to them. Where there is no actual notice, a user is bound if a reasonably prudent user would be on inquiry notice of the terms, and in web-based interfaces that inquiry turns on the clarity and conspicuousness of the notice as shown by the design and content of the screen. A user may assent by clicking a registration button when the interface clearly advises that doing so constitutes agreement to hyperlinked terms.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Nora Patel downloaded the QuickBite delivery app in Chicago and signed up on her phone. On the final signup screen, a large "Create Account" button appeared, and directly beneath it, in dark text on a white background, the screen stated: "By creating your account, you agree to the Terms of Use," with "Terms of Use" shown in blue underlined text; the full screen was visible without scrolling.

If Nora later sues QuickBite and QuickBite moves to compel arbitration based on a clause in the hyperlinked Terms of Use, what is the strongest argument that Nora is bound?

Explanation. An online agreement is enforceable when the user has reasonably conspicuous notice of the terms and unambiguously manifests assent. Here, the uncluttered screen, visible-without-scrolling notice, contrasting text, blue underlined hyperlink, and direct proximity to the account-creation button put a reasonably prudent smartphone user on inquiry notice. Clicking the signup button can manifest assent even if the user never opened the hyperlink and even though the button also creates the account. (Derived from Meyer v. Uber Technologies, Inc. (2017).)