Sierra Trading Post is an Internet retailer of brand-name outdoor gear, family apparel, footwear, sporting goods. Sierra lists comparison prices on its site to show consumers that its goods are competitively priced.
Chen, the plaintiff, sued Sierra, claiming the website’s comparison prices were false, deceptive, or misleading. The internet retailer defended by asserting that the lawsuit should be dismissed: Sierra pointed out that users of its site agreed to binding arbitration in the Terms of Use. Chen countered, arguing that he had never seen the Terms of Use and so they were not binding.
In Chen v. Sierra Trading Post, Inc., 2019 WL 3564659 (W.D. Wash. Aug. 6, 2019), a US court decision, the court reviewed the issues. There was no disagreement that the choice-of-law and arbitration clauses appeared in the Terms of Use. The question, as with so many of these cases, is around the set-up of Sierra’s check-out screen. Were the Terms of Use brought to the attention of the user, so that the user consented to those terms at the point of purchase, thus evidencing a mutual agreement between the parties to be bound by those terms?
Both Canadian and US cases have been tolerant of a range of possibilities for a check-out procedure, and the placement of “click-through” terms. This applies equally to e-commerce sites, software licensing, subscription services, or online waivers. Ideally, the terms are made available for the user to read at the point of checkout, and the user or consumer has a clear opportunity to indicate assent to those terms. In some cases, the courts have accepted terms that are linked, where assent is indicated by a check-box.
While there is no specific bright-line test, the idea is to make it as easy as possible for a consumer to know (1) that there are terms and (2) that they are taking a positive step to agree to those terms.
In this case, STP claimed that Chen would have had notice of the Terms of Use via the website's Checkout page where, a few lines below the "Place my order" button, a line says "By placing your order you agree to our Terms & Privacy Policy". The court noted that “The Consent line contains hyperlinks to STP's TOU and Privacy Policy.”
On balance, the court agreed to uphold the Terms of Use and compel arbitration. While this was a win for Sierra, the click-through process could easily have been much more robust. For example, rather than “Place my order”, the checkout button could have said “By Placing my order I agree to the Terms of Use” or a separate radio button could have been placed beside the Terms of Use and Privacy Policy to indicate assent.
Internet retailers, online service providers, software vendors and anyone imposing terms through click-through contracts should ensure that their check-out process is reviewed: make it as easy as possible for a court to agree that those terms are binding.