Designer Skin LLC v. S & L Vitamins, Inc., et al.
Steven J. Caspi, et al. v. The Microsoft Network, L.L.C., et al.
1999 WL 462175, 323 N.J. Super. 118, 732 A.2d 528 (N.J. App. Div., July 2, 1999)
On this appeal, the Appellate Division affirmed the determination of the Superior Court of New Jersey that the plaintiffs had entered into a binding contract by agreeing on-line via the click of a mouse to be bound by the terms of the Microsoft Network's subscriber agreement.
Before an individual can commence use of the Microsoft Network, she must first view a series of computer screens which set forth the terms of this subscriber agreement. These terms appear in a scrollable window next to blocks containing the words "I agree" or "I disagree," and set forth the terms pursuant to which the individual can use the Microsoft Network. The user cannot commence such use unless she clicks the "I agree" button. Each of the plaintiffs clicked the "I agree" button, thereby indicating their assent to be bound by the terms of the subscriber agreement. Both the trial and appellate courts held this created an enforceable contract between the defendants and their subscribers.
The Appellate Division went on to uphold the validity of the forum selection clause contained in these subscriber agreements. This clause mandates that all suits arising out of or related to the subscriber agreement be brought in courts located in Kings County, Washington.
Under New Jersey law, forum selection clauses are enforceable unless "(1) the clause is a result of fraud or 'overweening' bargaining power; (2) enforcement would violate the strong public policy of New Jersey; or (3) enforcement would seriously inconvenience trial." The court found that the clause at issue was not the result of "overweening bargaining power" because the plaintiffs could obtain the services offered by defendants from third parties, and therefore had the ability to reject the subscriber agreement if they did not like its terms. The court held that the forum selection clause did not offend New Jersey's public policy, because the State of Washington had statutes similar to those of New Jersey regulating the alleged wrongs for which plaintiff's sought redress in their suit. Lastly, the court held that enforcement of the forum selection clause would not 'seriously inconvenience trial' because the named plaintiffs, as well as the purported class members, were scattered throughout the country.
The court rejected plaintiffs' claim that the forum selection clause was not enforceable because plaintiffs were unaware of it at the time they entered into their agreement. Though found in the beginning of the last paragraph of the agreement, the clause appeared in the same type face as the majority of the language in the agreement. As such, "plaintiffs ... were free to scroll through the various computer screens that presented the terms of their contract before clicking their agreement." Having agreed to be bound by the contract's terms, it did not matter that plaintiffs had failed to read them. Said the court:
To conclude that plaintiffs are not bound by [the forum selection] that clause would be equivalent to holding that they were bound by no other clause [of the subscriber agreement] either, since all provisions were identically presented. Plaintiffs must be taken to have known that they were entering into a contract; and no good purpose, consonant with the dictates of reasonable reliability in commerce, would be served by permitting them to disavow particular provisions or the contracts as a whole. (Citation omitted).
The court left open the possibility that burying a forum selection clause in the electronic equivalent of fine print might render it unenforceable if the contracting party did not have notice thereof.