Offer and Acceptance . . . by Inquiry Notice.  This is not a traditional understanding of contract law, but then again, Internet sites do not always provide traditional contracts.  Recently, a district court cited 9th Circuit precedent in deciding that because an online user had “at least inquiry notice of his need to comply with the Terms in using the website, and he continued to use the site knowing he was bound by the Terms, the user accepted the Terms by using the site.” Gutierrez v. FriendFinder Networks Inc., No. 18-CV-05918-BLF, 2019 WL 1974900, at *8 (N.D. Cal. May 3, 2019).

With ever-increasing Internet usage rates, online contracts are becoming more and more commonplace; consequently, it is more important than ever for webpage providers and consumers alike to understand the basics (and the complexities) of online contract law.  As the court explained in Gutierrez, contracts formed on the Internet can usually be described as either clickwrap or browsewrap agreements:

“clickwrap” (or “click-through”) agreements, [are agreements] in which website users are required to click on an “I agree” box after being presented with a list of terms and conditions of use; and “browsewrap” agreements, [are agreements] where a website’s terms and conditions of use are generally posted on the website via a hyperlink at the bottom of the screen…. Unlike a clickwrap agreement, a browsewrap agreement does not require the user to manifest assent to the terms and conditions expressly … a party instead gives his assent simply by using the website…. The defining feature of browsewrap agreements is that the user can continue to use the website or its services without visiting the page hosting the browsewrap agreement or even knowing that such a webpage exists.

Id. at *4 (citing Nguyen v. Barnes & Noble Inc., 763 F.3d 1175-76, 1177 (9th Cir. 2014). The 9th Circuit, in Nguyen, noted that courts are generally reluctant to enforce browsewrap agreements against individual consumers, but courts are more inclined to do so when a website contains “an explicit textual notice” that continued use of the website will suffice as intent to be bound. Id at 1176. This the “Inquiry Notice” theory.

In Gutierrez v. FriendFinder Networks Inc, the plaintiff was banned from at least a portion of the FriendFinder website. A FriendFinder customer service representative informed the plaintiff that he had been banned because he violated the Terms of the website, which he needed to follow when using the website. The plaintiff responded “Yeah I know,” but allegedly still did not read the Terms. See Gutierrez, 2019 WL 1974900 at *8. The court reasoned that a “failure to read [the Terms], despite knowing he was bound by them, cannot absolve [a party] of his need to comply with them.” Id.  Thus, mere knowledge that a website’s Terms were posted in a browsewrap-fashion and a user’s continued use of the website with the understanding that he was bound by the Terms, was enough to show that the user accepted the website’s terms of use because he had “Inquiry Notice” of the terms of use . Id.

One could argue that the Inquiry Notice theory is merely a “well-advertised browsewrap” standard, and that Gutierrez v. FriendFinder Networks Inc. opens the door to online users being bound by a website’s Terms without seeing or acknowledging that they have read the Terms. Take, for example, the following hypothetical webpage:

Following the Gutierrez court’s interpretation of Nguyen v. Barnes & Noble Inc., the hypothetical webpage above might be sufficient to bind the user to the Terms of Use, because the webpage (i) provides “explicit textual notice that continued use will act as a manifestation of the user’s intent to be bound,” and (ii) the Terms are “readily available to [an individual user of] the website, such that his failure to read them, despite knowing he was bound by them, cannot absolve him of his need to comply with them.” Id at *7.  Thus, the hypothetical webpage above could bind the user by nothing more than a well-advertised browsewrap agreement.

Companies with an online presence should be weary of the decision in Gutierrez and weary of browsewrap agreements in general, but especially of those drafted in an incomplete manner. While the Northern District of California decided that an Inquiry Notice standard was enough to show a user’s acceptance of the Terms, the court did so with a tight fact pattern and a loose interpretation of the 9th Circuit’s decision in Nguyen v. Barnes & Noble Inc. In Nguyen v. Barnes & Noble Inc., the 9th Circuit cited cases favorable to an Inquiry Notice standard only where the cases included an online user, who indicated they “read and agreed to” the terms of use. Nguyen, 763 F.3d at 1177. Thus, if companies with an online presence choose to use a browsewrap agreement, it is still advisable to ensure that the individual user has both “read and agreed” to the terms of use.