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When will a website user be bound by an arbitration clause that is buried in the Terms of Use Agreement? When addressing such questions, courts look to the basic principles of contract formation – the meeting of the minds – to determine whether consent was given to the formation of a contract. In general, the courts have favoured ‘click wrap’ agreements, where the consumer is required to click “I agree” to indicate intention to be bound by the terms and conditions. The closer the link to the terms and conditions is to the “I agree” button, the more likely it is that the court will find consent has been given.

But what if the terms and conditions impose an arbitration clause on a user who clicks “Like” on a Facebook page in exchange for receiving a coupon to a brand name product? Recently, General Mills received a great deal of blowback for what appeared to be an attempt to force an arbitration clause on anyone who visited its site. As a result of the unwanted media attention, General Mills retracted its position, and clarified that the clause only applied to users who “subscribed to our publication or downloaded a coupon”. Most consumers would be surprised to learn that purchasing a product with the use of a coupon would result in a waiver of their rights to sue General Mills for harm suffered as a result of using the product.

While legal commentators are split on the enforceability of General Mill’s arbitration clause, it remains important to ensure that site users are actually made aware of any arbitration clause in the terms of use before they can click “Like” or “I agree”.

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Take away:

  • The enforceability of an arbitration clause in a website terms of use agreement will depend on the physical design of the webpage and the likelihood that the user had access to the terms and conditions before “clicking”.

 

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