By creating an account, you agree to the Terms of Service & Privacy Policy. This is an example of a sign-in wrap agreement, an electronic contract in which users manifest their assent to a service provider’s terms and conditions by creating an account. Electronic contracts enable efficient transactions in everyday life. Although these agreements are generally enforced using traditional contract principles, their electronic form raises distinct enforceability issues.

In 2014, Uber app users filed a class action lawsuit against the ridesharing company for allegedly violating Massachusetts consumer protection law. In response, Uber filed a motion to compel arbitration. The company explained that it had provided a “Terms of Service & Privacy Policy” hyperlink to these users during the account registration process, which contained an arbitration provision. The district court granted the Defendant’s motion and dismissed the complaint.

The First Circuit recently reversed this decision in Cullinane v. Uber Techs., Inc. The Court held that Uber’s arbitration clause was not legally enforceable because the hyperlink leading to the clause was not sufficiently conspicuous. The Court was especially concerned that the “Terms of Service & Privacy Policy” hyperlink was neither blue nor underlined. Additional bold and large text on the screen also discounted the link’s conspicuous nature. Overall, the software design did not adequately notified Uber users of the agreement’s presence. Because a reasonable person was not put on notice to click on “Terms of Service & Privacy Policy,” it was unreasonable to infer that Plaintiffs had provided informed consent during the registration process. Therefore, they were not forced to arbitrate.

Cullinane suggests that businesses should consider keeping hyperlinks in a classic blue and underlined format to help provide adequate notice of terms and conditions. This case is one of several recent electronic contracting cases that present larger questions regarding the applicability of traditional contract principles to electronic contracts. If the average Uber user is aware of a hyperlink’s traditional design and purpose, what else is the reasonable person assumed to know when engaging in electronic transactions? Should the reasonable person standard be the same for electronic contracts and traditional contracts? How, if at all, should it account for the technology generation gap? As e-commerce continues to grow, courts will likely continue to discuss these issues.

Alice Haston

Tagged with:

Comments are closed.