May 05, 2017 Practice Points

Website Arbitration Agreement Found Wanting

By Robert E. Bartkus

In Hite v. Lush Internet Inc., No. 16-1533, 2017 WL 1080906 (D.N.J. Mar. 22, 2017), a New Jersey District Court described in very straightforward terms the law that is "firming up" in the area of arbitration agreements contained on internet sites.

The plaintiff was dissatisfied with cosmetics she purchased on the defendant's website and sued. The defendant moved to compel arbitration in accordance with the "terms and conditions" referenced on the website. However, the terms and conditions were not spelled out on the website, and there was no "accept" button for the terms and conditions that had to be clicked before completing the purchase. The court found that merely having the website say, down at the bottom and pretty much out of view, that the terms and conditions became a part of the parties' agreement did not make it so. As the court noted:

[The website] could easily have alerted the user to the important rights that the user is being asked to waive in summary form, and urged the user to examine the detailed Terms via hyperlink, but it did not do so. It could have structured the transaction so that the user manifests acceptance by clicking "I accept" after the Terms are displayed, but it did not do that either. In short, it is insufficient under New Jersey law to simply state, as in this case, in an inconspicuous manner that one may "Read the Terms of Use" with a hyperlink underline for "Terms of Use." Absent knowledge and assent to the Terms of Use, Plaintiff cannot be bound by the provisions, including the mandatory arbitration clause.

Practice Pointer
To make a website arbitration agreement enforceable, make sure that it is clearly displayed and alerts customers to its existence. Also require the customer to click a box or button that evidences the customer's agreement to arbitrate as part of the order process.

Keywords: alternative dispute resolution, adr, litigation, website, arbitration agreement, accept, click, Terms of Use

Robert E. Bartkus is Of Counsel at McCusker, Anselmi, Rosen & Carvelli, P.C. in Florham Park, New Jersey.


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