Major v. McCallister: Browsewrap Agreement Upheld by Missouri Court of Appeals
Digital media law: Online contracts typically fall into two categories: clickwrap and browsewrap agreements. In clickwrap agreements, a user expressly indicates his/her assent to a website's terms of use by clicking on a button that says "I agree" or "OK." In browsewrap agreements, a user does not expressly indicate his/her assent by clicking on a button, but ostensibly indicates his/her assent to the site's terms of use in some other fashion - such as by submitting information or clicking other buttons.
Courts routinely enforce clickwrap agreements. See our post of November 13, 2009. However, the FTC has begin to subject such agreements to increased scrutiny and found some to be unfair where users were asked to register their assent to the agreement before being aware of all their terms. See our post of September 21, 2009. Courts often have difficulty enforcing browsewrap agreements for similar reasons -- because it is often difficult to demonstrate that the user ever read the terms of use or assented to them.
However, in recent case, a Missouri Court of Appeals upheld a browsewrap agreement - but one that verged on actually being a clickwrap agreement. The case, Major v. McCallister, Missouri Court of Appeals, No. CD29871 (Dec. 23, 2009), involved a website operated by ServiceMagic, which offered users free referrals to construction contractors.
A visitor to the ServiceMaster website first encountered several screens in which he/she inputted information about his/her remodeling project. Each of these pages contained a hyperlink to ServiceMaster's Terms of Use. A user was not required to click on the hyperlink or read the Terms of Use to proceed.
After the user entered his/her project information, the ServiceMaster site would produce a screen stating that the user had been matched to several contractors. The screen also contained space for the user to enter his/her contact information, followed by a "Submit for Matching Pros" button. Next to the button was a blue hyperlink to the website's Terms of Use and the statement "By submitting you agree to the Terms of Use."
The Missouri Court of Appeals held that the Terms of Use in the ServiceMaster site were enforceable. In support, the Court cited cases from Texas and New York for the proposition that "courts usually uphold browsewraps if the user 'has actual or constructive knowledge of a site's terms and conditions prior to using the site.'" Here, the Court held that ServiceMaster's placement of a blue hyperlink to its Terms of Use right next to a button a user was required to push meant that ServiceMaster had given its users "immediately visible notice of the existence of license terms."
The Court was not bothered by the fact that a user could opt not to read the Terms of Use. Rather, it cited approvingly a statement from the Eastern District of Missouri that "[f]ailure to read an enforceable online agreement, as with any binding contract, will not excuse compliance with its terms. A customer on notice of contract terms available on the Internet is bound by those terms." (Citing Burcham v. Expedia, Inc., 2009 WL 586513 at *2).
So what do we make of this ruling? While the Court characterized the ServiceMaster site as involving a browsewrap agreement, the site design verges on a clickwrap agreement. So this ruling may not tell us much about how the Court would rule when dealing with other browsewrap agreements. However, recent FTC actions to the contrary notwithstanding, as the Internet portion of the economy grows and Internet contracting becomes more pervasive, we are likely to see more courts ruling as the Missouri Court of Appeals did here.
David Johnson's practice focuses on complex litigation and science, technology and health law. David can be contacted at (415) 399-6032 or DJohnson@ebglaw.com.
