Careful What You Click

A Texas online purchaser used her daughter-in-law’s credit card to order some automobile seat covers and have them delivered to the daughter-in-law in Alabama. When they were delivered, it was discovered that the covers were the wrong color. The daughter-in-law sent them back to the company and reversed the charge on her credit card. The company claimed that it never received the seat covers, and eventually sued the purchaser and the daughter-in-law for breach of contract.

The lawsuit against the customers was reason enough for heartburn, but adding to the problem was the fact that the action was filed in a state court in Indiana, far from either of the defendants’ homes. The defendants’ attempt to avoid having to defend the suit in Indiana failed. The “clickwrap” agreement that the customer had accepted with a click of the mouse when she purchased the items included a requirement that any legal proceeding between the purchaser and seller had to be filed in Indiana and governed by Indiana law.

It may be that most customers only skim the language in a clickwrap agreement, if they read it at all, while looking for the “I accept” button. However, the agreement, and everything in it, is no less binding because of that. Both the customer and the owner of the card she used were bound to litigate the dispute in Indiana.

The court emphasized that the online agreement gave reasonable notice of its terms. Its full text was immediately visible to the customer, who had to take the affirmative step of clicking on the “I accept” button. Not only that, but the heading for the “litigate only in Indiana” section was in bold print and capital letters.

In most cases and for most people, the legalese in clickwrap agreements is of little practical consequence, but online customers should be on notice that agreeing to buy a product may also entail agreeing that any dispute will be litigated on the other side of the country and be decided according to another state’s laws.