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Are Internet Arbitration Provisions Binding?

Jul 27, 2021 | Written by: Tracy B. Bussel, Esq. |

Recently, the Appellate Division in New Jersey ruled that a company wishing to arbitrate disputes must put its clients on notice of its intention to do so.  In Wollen v. Gulf Stream Restoration and Cleaning, LLC et als., the plaintiff consulted HomeAdvisor, a website that provided a referral for a contractor to renovate her home.  During the registration process and completion of her service request, the plaintiff was asked to provide information about her project on six different (6) web pages and click the “next” button on each page to proceed.  None of those pages referred the plaintiff (or the user) to HomeAdvisor’s separate terms and conditions web page.  On the seventh and final page, the website advised the plaintiff it had contractors matching the criteria she entered.  This page also required her to enter her contact information, with a button asking her to view her matches followed by a single line of text stating that by submitting her request she agreed to the Terms and Conditions, which hyperlinked to a separate seven-page document. On the final page of the HomeAdvisor Terms and Conditions was a mandatory arbitration clause.  Without clicking this button, the website would not allow the service request to be submitted.  Absent from HomeAdvisor’s Terms and Conditions was a signature line or electronic button requiring the user to “click to accept” those Terms and Conditions before returning to and clicking the View Matching Pros button.  As such, the user could click and view the matching pros without ever viewing the Terms and Conditions containing the arbitration provision.

The plaintiff hired Gulf Stream to perform the work.  She was dissatisfied with their services after spending more than $97,000, and she sued the company and its principals in Superior Court.  She later amended her complaint to name HomeAdvisor as a defendant, asserting causes of action for breach of contract, violations of the New Jersey Consumer Fraud Act, property damage, fraud and unjust enrichment, negligence, and violations of the New Jersey Truth-in-Consumer Contract, Warranty and Notice Act.  One of HomeAdvisor’s defenses was the arbitration provision from the Terms and Conditions clause on its website.  The plaintiff testified that she did not recall clicking on the “Terms & Conditions” hyperlink before clicking to view the matching pros.

In making its decision, the court determined HomeAdvisor did not demonstrate that the plaintiff was on notice of the arbitration provision prior to submitting her service request through the website.  The arbitration provision at issue was masked behind layers of web pages and thus was not binding upon the plaintiff.  Therefore, the plaintiff did not knowingly and voluntarily agree to waive her right to resolve her disputes in court.  In its decision, the court noted that the pertinent inquiry is whether the internet user was provided with reasonable notice of the applicable terms.  For instance, the case exemplified a “browsewrap agreement,” which exists when the online host dictates that assent is given merely by using the site.  In interpreting enforceability with these types of agreements, courts look to whether the terms or a hyperlink to the terms are reasonably conspicuous on the webpage.  To the contrary, “clickwrap,” "click-through" or "click-to-accept" agreements require a user to consent to any terms or conditions by clicking a dialog box on the screen in order to proceed with the internet transaction, and these are routinely enforced.  Nonetheless, federal and state courts deciding whether an internet user was placed on "reasonable notice" of the terms of an online agreement have consistently applied a "fact-intensive inquiry.”  The lesson here is to make sure to read all documents before signing, clicking, or acknowledging.  It is also a good idea to print copies of the web pages before agreeing to anything.

In this regard, if you have any concerns about the validity of an internet agreement you accepted or are accused of acknowledging, it is best to retain copies of all documents and seek the assistance of an attorney.



Tracy B. Bussel, Esq., is a partner at Gebhardt & Kiefer, PC, and practices primarily in the areas of employment law, civil rights litigation, general liability, insurance defense, and the representation of public entities.  Contact Ms. Bussel at 908-735-5161 or via email.

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Any statements made herein are solely for informational purposes only and should not be relied upon or construed as legal advice.