Saying Yes

Signing The Dotted Line When There’s No Dots Or Paper

Much of the dispute about online pricing errors has to do with at what point there is a valid contract and what happens when there is a pricing error.

Best Buy apparently believes that they’ve given themselves an extra layer of legal protection by essentially saying in their Terms of Service that they have the right to change prices even after receiving an offer.

Is such a clause in-and-of-itself illegal? Absolutely not.

You might say, “But wait a minute, I never saw that and I certainly never agreed to that!”

Is this a matter of “tough luck, sucker?” Maybe not. A recent court case raises big doubts as to whether the means by which Best Buy handled this is legally enforceable. In other words, the what isn’t the problem, the how is.

For contract clauses to be valid and enforceable, both parties must have at least a reasonable opportunity to examine and consent to those clauses. What that means is if you sign a contract without reading any of it, you are just as bound by what is said in that contract as if you spent three days scrutinizing every word, because you had the opportunity to read it before signing (or otherwise agreeing).

However, if you don’t get a reasonable opportunity to agree and consent to particular terms, then those particular terms may well not be enforceable.

In the case of Best Buy, the Terms of Service can be reached by a link at the bottom of the sales webpages. There is no requirement to read them or assent to its provisions before buying something.

This brings us to the case of Specht v. Netscape. The key point here is whether or not the people in the case agreed to become subject to the Netscape license agreement.

A court case cited in support of the court’s decision went as follows:

“A third type of software license, “browse-wrap” was considered. . . . Notice of a license agreement appears on the plaintiff’s web site. Clicking on the notice links the user to a separate web page containing the full text of the license agreement, which allegedly binds any user of the information on the site. However, the user is not required to click on an icon expressing assent to the license, or even view its terms [before using it].”

(Sounds pretty close to the Best Buy situation, doesn’t it?)

That court didn’t say that browse-wrap licenses were unforceable, but they clearly didn’t like the idea.

The court in Specht not only didn’t like the idea, they said that certain provisions of the license agreement could not enforced by Netscape because the parties had not been given the chance to assent to its clauses.

True, that case talked about a license, and Best Buy is about buying something, but the underlying concept behind both is consent to terms of a contract. While Specht is not necessarily a precedent-setting decision, the logic is pretty compelling.

That doesn’t mean the court didn’t think the license agreement was unforceable, period. The court would have found that OK if the software had contained a screen like the one MS uses where you have to click to indicate that you assent to the EULA, and if you don’t, the software doesn’t load. In short, “click-wrap” like MS is OK, browse-wrap is not OK.

Type in “Specht Netscape” in a search engine, and you’ll see that plenty of real lawyers are saying the same thing and advising folks to go with some sort of click-wrap to indicate assent to terms of service rather than just have a webpage with the terms and a link to them.

Maybe A Few More Feasts, Then The Gravy Train Ends

This probably doesn’t matter too much to Best Buy due to the specific circumstances surrounding it, but this could land some other online retailers in trouble.

You know what’s going to happen, though? In the long run, Specht is going to end all this nonsense.

Every retail site will essentially require you to click to assent to any and all conditions of sale. A retailer wants the right to fix pricing errors (they’ll give you the option to opt out should they do so)? Either agree or you can’t buy from them. End of story. Now that will be a slamdunk legally.

In fact, in the long run, consumers will probably be worse off in dealing with retailers because the more unscrupulous will put all sort of things into those terms of sale, and unless they’re truly outrageous, once you’ve clicked, you’ve agreed, which makes arguing before a judge or trying to hold a company up for ransom a whole lot harder.

Email Ed