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Consent is generally a precondition to an enforceable contract. Some website operators have attempted to enforce arbitration clauses set forth in the terms and conditions listed on their websites just because a consumer visited the website—a practice commonly known as a "browsewrap" agreement.
Prior California case law has disapproved of browsewrap agreements to arbitrate. In Weeks v. Interactive Life Forms, LLC (2024) 100 Cal.App.5th 1077, the California Court of Appeal held that visiting a website, without any indicia of affirmative consent to its terms of use, is insufficient to create a binding agreement to arbitrate. The Court further confirmed that California's precedent on this point is not preempted by the Federal Arbitration Act ("FAA").
In Weeks, a consumer sued an online vendor alleging the vendor falsely advertised and misrepresented products sold on its website. The vendor moved to compel arbitration based on a dispute resolution provision contained in the website's hyperlinked "terms of use," which appeared in small gray text at the bottom right corner of every page of the website. The vendor moved to compel arbitration. The trial court denied the motion noting that the vendor failed to show that the plaintiff had assented to the "inconspicuous" terms of use.
The vendor appealed the denial of the motion to compel arbitration arguing that: (i) the Court should overrule prior precedent disapproving of browsewrap as insufficient to demonstrate consumer assent to arbitration and (ii) the FAA was inconsistent with and thus preempted California law refusing to enforce browsewrap arbitration agreements.
The Court of Appeal rejected both arguments. In line with prior authority, the vendor's browsewrap arbitration agreement was not enforceable because there was insufficient evidence of the consumer's assent to the terms of use on the website. While the Court did not categorically reject browsewrap agreements, it recognized they are generally disfavored because they "do[] not require the user to take any unambiguous action to agree to the terms of use[.]" Accordingly, courts must determine whether the website (e.g., its design and content) puts a "reasonably prudent user" on inquiry notice of the terms of the contract—a high standard that the vendor failed to satisfy. The vendor also failed to introduce sufficient empirical evidence to show that a reasonably prudent user in today's society would expect a browsewrap agreement to govern his or her use of a website.
The Court of Appeal also rejected the vendor's "novel" claim that the FAA preempted California law disfavoring browsewrap agreements. Under the FAA, courts must "ordinarily defer[] to state law on questions of contract formation" unless such state law improperly discriminates against arbitration. California's rejection of browsewrap agreements to arbitrate did not discriminate against arbitration because any contract would be subject to the same challenge. Merely visiting a website is generally not sufficient to show mutual assent to assume any contractual obligations.
It is easy to see how the result would have been different if the vendor had recorded its customer's affirmative consent to the terms and conditions on its website when the customer placed an order. The Court of Appeal's decision in Weeks serves as a reminder for any business that sells online to periodically review its practices with respect to its online customers to ensure that such practices comply with applicable law.
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