Florida Appeals Court Declines to Enforce Online Arbitration Agreement
On February 15th, 2017, Florida’s Fourth District Court of Appeal issued an instructive decision in a case involving a mandatory arbitration agreement. The case, Vitacost.com, INC v James McCants, originated after the two parties got into a dispute regarding the sale of online dietary supplements. By making a purchase on the Vitacost website, the company argues that customer automatically agreed to all of the terms included in its sales agreement. One of these terms is a forced provision to settle any legal disputes. However, when a dispute arose between Vitacost and James McCants, McCants sought to have the arbitration provision voided.
Why the Appeals Court Voided the Mandatory Arbitration Clause
For a sales agreement to be enforceable, reasonable customers must have a fair opportunity to understand what they are ‘agreeing’ to when they make a purchase. This is especially important when it comes to internet purchase, as online sales agreements can be presented to the buyer in a wide variety of different ways. The presentation of the sales agreement, and thus its mandatory arbitration clause, became a deciding issue in this case. More specifically, this case was decided against the online retailer because the company used a ‘browsewrap agreement’ instead of a ‘clickwrap agreement’.
Browsewrap and Clickwrap: Explained
A clickwrap agreement is an online sales agreement that requires the buyer to click a box acknowledging that they have read the ‘terms and conditions’ of the purchase before they can move forward with completing the transaction.
A browsewrap agreement does not require a click to complete the transaction. Instead, this type of presentation simply provides the buyer with a link to the terms and conditions associated with the purchase. At no point does the buyer actually have to click anything to acknowledge that they understand and agree to the listed terms.
Online Arbitration Clause Enforceability: Presentation Matters
In the state of Florida, clickwrap agreements are almost always enforceable. However, browsewrap agreements are far more suspect. Indeed, when a website uses a browsewrap agreement, the court will conduct a comprehensive analysis to determine whether or not the buyer had a fair chance to read and understand the seller’s terms and conditions. In this case, Vitacost.com was using a relatively well hidden browsewrap sales agreement. Upon review, the Fourth District Appeals court found that the terms and conditions, which of course included the arbitration clause, were not fairly presented to the buyer. As such, the sales agreement could not be enforced. This case reiterates how important it is for online sellers to properly design their websites so that they can ensure that their terms and conditions are actually enforceable under Florida law. The failure to consider this issue could cost your company its legal rights.
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