You May Read this Post if You Click, “I agree”

Noah Feldman is a professor of constitutional and international law at Harvard University.  He wrote an interesting commentary about a recent Seventh Circuit decision. It says, in part:

When was the last time you actually read the terms of service before clicking “I agree” on a website? Unless your answer is “never,” I don’t believe you — and I don’t think it’s your fault, either. But the U.S. Court of Appeals for the 7th Circuit has a subtler view than mine. On March 25, it held that you’re not bound by a contract if it wasn’t made clear that you were supposed to read it. But if it is made clear, the contract binds you, whether you read it or not.

The facts of the case were pretty outrageous, as these things go. Gary Sgouros signed up online to get his credit score with TransUnion Corp. When he went to a car dealership armed with his good credit score, they laughed him off. His actual score was 100 points lower than TransUnion had claimed.

Sgouros sued, claiming to represent a class of similarly misled clients. TransUnion said that he couldn’t sue because he’d agreed to submit any disagreement to binding arbitration as part of the terms of service on its site.

The district court rejected TransUnion’s argument, and the 7th Circuit agreed. The basis for the appeals court’s holding was that TransUnion’s site never actually made Sgouros look at or agree to the arbitration agreement. Instead, the website referred to a “service agreement” and accompanied the reference with a paragraph that said nothing about arbitration. Next to the service agreement box, the words “Printable Version” appeared. If you clicked that, you got a 10-page document that included the arbitration promise — on page 8.

Given the borderline deceptive nature of the website, the 7th Circuit had no trouble concluding that Sgouros hadn’t signed a contract. But the important part of the opinion wasn’t the conclusion that Sgouros could go forward with his suit against TransUnion without arbitration.

What mattered was the court’s explanation of why checking the website’s service agreement box was inadequate to form a contract — because that in turn would indicate what sort of consent by Sgouros would have formed a binding contract.

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