Nguyen v. Barnes & Noble, Inc.

United States Court of Appeals for the Ninth Circuit · 2014 · Contracts

ContractsArbitrationBrowsewrap AgreementsOnline Contract Formationbrowsewrapclickwraparbitrationconstructive notice

Facts

Nguyen purchased two discounted Hewlett-Packard Touchpads on Barnes & Noble's website and received an email confirming the transaction, but the company cancelled the order the next day due to high demand. He then sued on behalf of himself and a putative class, alleging deceptive business practices and false advertising under California and New York law. Barnes & Noble's Terms of Use were accessible through a hyperlink in the bottom left-hand corner of every page, including checkout pages, but Nguyen never clicked the link, never read the terms, and was never prompted to affirmatively assent to them. The Terms of Use stated that users were deemed to accept them by visiting the site, creating an account, or making a purchase, and they included an arbitration clause and a New York choice-of-law provision.

Issue

Whether Nguyen, by using Barnes & Noble's website and making a purchase without clicking or reading the Terms of Use, assented to a browsewrap agreement containing an arbitration clause. Also, whether Nguyen was equitably estopped from avoiding arbitration because his complaint relied on the Terms of Use's choice-of-law provision by asserting claims under New York law.

Rule

A browsewrap agreement is enforceable only if the user has actual notice of the terms or the website provides constructive notice sufficient to put a reasonably prudent user on inquiry notice of them. Where a website merely makes terms available through a conspicuous hyperlink on every page, but gives no additional notice and requires no affirmative manifestation of assent, even close proximity of the hyperlink to buttons the user must click is insufficient, without more, to establish constructive notice. Direct benefits estoppel does not compel arbitration where the party is not the kind of nonsignatory third-party beneficiary contemplated by the doctrine and the alleged benefit from the contract is only incidental.

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

Lena Ortiz ordered kitchen supplies from Harbor Pine Home's website while in Portland, Oregon. Every checkout page displayed an underlined green "Terms of Service" hyperlink in the lower left corner, a few inches below the "Submit Order" button, but the site never stated that placing an order constituted agreement and never required Lena to click any acknowledgment.

If Harbor Pine moves to compel arbitration under a clause in the hyperlinked terms, what is the strongest argument against enforcement?

Explanation. The controlling rule is that a browsewrap agreement is enforceable only if the user had actual notice or was put on constructive or inquiry notice by the website's design. Where the site merely provides a conspicuous hyperlink on each page but gives no notice that use or purchase constitutes assent and requires no affirmative acknowledgment, proximity alone is not enough. The majority did not hold browsewrap agreements categorically invalid, nor did it require handwritten signatures.