Berman v. Freedom Financial Network, Browse-Wrap May Be Dead

Most companies used browse-wrap (terms and conditions which require no customer consent) to present their terms of service to the consumers, usually via hyperlinks. Due to Berman v. Freedom Financial Network, browse-wrap may be dead. The classic use of browse-wrap is to steer any dispute with the user either into arbitration or at least choosing the forum (e.g., County Court in Dade County, Florida). Other uses are to bind the purchaser’s terms of services with their product licenses, class-action waivers, and warranty disclaimers.

The Basics

In Berman, the US Court of Appeals clarified website design requirements, essentially ruling that consumers can only be bound to terms of service if the user interface demonstrates enough consumer interaction to be clear to the consumer that they agreed to the terms posed and that there was a formal agreement between the consumer and the company posting the website (e.g., clickwrap). Berman’s fundamental principles of presenting enforceable terms of service via hyperlinks include:

  • The provision of reasonably conspicuous notice of the terms of service.
  • Enabling the consumer to take action to prove they assent to the terms.

The Specifics

Berman further identified the specific website designs that companies should use to create enforceable agreements and notify consumers about their terms of service. For instance

  • A company’s website should present its terms of service in capital letters and in contrasting font color (usually blue) to alert the consumers to the terms of service.
  • The website should notify a user of the legal significance should they agree to the terms of service on the website. The court specifically ordered that consumers must be explicitly advised that clicking the “agree” button will be assenting to the terms of service, and they will be entering into some form of contractual agreement with the company.
  • Companies should also pay attention to other visual elements on their webpage since they may draw the user’s attention away from the notice and make the agreement unforeseeable.

In summary, the Courts will be very cautious in enforcing clickwrap contracts. So the moral of the story is: if you do not want to be subject to lawsuits where the customer lives or at all want to control your commercial relationship with consumers –review your terms of use/service with counsel, and explore clickwrap.

Schedule your call today to review your terms of service with our experienced attorneys.

Contributing Advisors