ContractsProf Blog

Editor: Jeremy Telman
Valparaiso University Law School

Monday, January 18, 2021

Evolving Meaning of Reasonable Notice

A few weeks ago, I blogged about Hansen v. Ticketmaster, a case that IMHO did contract law wrong by taking an unrealistic approach to what constitutes unreasonable notice.  I noted that this case seemed to be on the wrong side of a trend which reallocates the burden that wrap contracts places upon the parties.  Law and econ scholars extoll the efficiency virtues of mass consumer contracts but often neglect to consider the burden that these contracts place upon consumers who are expected to read all the itty bitty terms – or the ALL CAPS terms that are only accessible by clicking on a hyperlink (or three).  As I have discussed elsewhere, recent cases have adopted a different and more encouraging approach by expecting more from the drafters in terms of better presentation of terms.  Under this trend of cases, “reasonable notice” means not only that the adherent has a duty to read, but that the drafter has a duty to draft reasonably (something that I written about many times, including here and here). 

Two subsequent cases reflect that trend which takes the notion of “notice” more seriously. 

The first case, C.D. v. Massage Envy Franchising, LLC, DOCKET NO. ESX-L-3263-19 (N.J. Super. Dec. 3, 2020) involved a plaintiff who alleged that a massage therapist committed assault and battery during a massage and so breached the contract between the parties which prohibited such conduct.  The defendants claimed that the plaintiff agreed to arbitration when she clicked “agree” on a check box at the bottom of an electronic consent form.  The plaintiff was presented with the form when the plaintiff arrived for the service.  The form was presented on a tablet device.  The check box was at the end of a multi-page “General Consent” form and next to the words “I agree and assent to the Terms of Use Agreement” which was a hyperlink.  Underneath the check box was a signature line where the plaintiff signed her name. 

Massage Envy argued that the claim should be submitted to arbitration and, alternatively, that the contract’s forum selection clause required the case be litigated in Arizona and not New Jersey.  The court disagreed, finding that the “General Consent” form failed to clearly direct the plaintiff to the Terms and Conditions which was where the arbitration and forum clauses lurked.

The court stated that it was not holding that clickwrap agreements as a form of contract were unenforceable; rather, it was that this particular agreement was not enforceable because of the way it was presented:

 “within a lengthy electronic document reached only by a hyperlink, which was accessible only adjacent to a signature line, which signature line followed a lengthy list of rules and disclaimers contained on an extended series of screens through which the user was required to scroll, was not under any fair analysis placed in such a way so as to give the plaintiff notice that there was more to consider in agreeing to the defendant’s member rules.”

This case reflects the trend toward placing more of the burden of wrap contracts on the party that has more control over them – the drafting business.  The court further noted that: 

“While it is undisputed that plaintiff did not read the electronic agreement reachable only by hyperlink, that is attributable, in this court's opinion, not to laziness, disinterest, or blithe indifference, but rather to an objectively confusing, nay misleading, design of the website. As a result, plaintiff's ignorance of the document's terms cannot fairly be ascribed to anything she did wrong.”

Because of the length of this post, I will blog about the second case tomorrow.

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Today, a California appellate decision declaring a solar company's arbitration provision unconscionable when presented to a homeowner via a salesperson's iPad or other electronic device:

Posted by: Chris Ng | Feb 1, 2021 4:56:58 PM

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