Turning the Page on "Hyperwrap" Contracts

Hyperwrap contracts. That was a new phrase for me, until I read it this morning in PDC Laboratories Inc. v. Hach Co., No. 09-1110 (C.D. Ill., Aug. 25, 2009), a case in which the court held that a limitation of remedies clause that was available for viewing behind a hyperlink was an enforceable term in the parties' contract for the sale of goods.

The court said it was following Hubbert v. Dell Corp., 359 Ill. App.3d (Ill. Ct. App. 2005), a case in which an Illinois appellate court similarly held that contract terms available behind a blue hyperlink on a white page -- a Web browser's default color display -- were adequately brought to the purchaser's attention. Hubbert, the court said here, "is the leading authority in 'hyperwrap' cases, such as the case now before the Court."

My mind is not nimble enough to detect any difference between hyperwrap and browsewrap, at least in the rhetorical sense. Hyperwrap doesn't add anything to my understanding of what is going on from a legal perspective, and neither term feels like firm footing to me.

As far as the facts are concerned, there were some small but apparently inconsequential differences between Hubbert and PDC Laboratories. In Hubbert, the link to the additional terms was displayed five times during the contracting process, whereas in PDC Laboratories the link was visible just three times. Hubbert involved an arbitration clause; in PDC Laboratories the hyperlinked additional term was a limitation remedies clause. Cutting the other way, PDC Laboratories involved a business-to-business contract, while Hubbert dealt with a consumer transaction.

From Hubbert:

The blue hyperlinks on the defendant's Web pages, constituting the five-step process for ordering the computers, should be treated the same as a multipage written paper contract. The blue hyperlink simply takes a person to another page of the contract, similar to turning the page of a written paper contract. Although there is no conspicuousness requirement, the hyperlink's contrasting blue type makes it conspicuous.

From PDC Laboratories:

It is undisputed that the Terms were hyperlinked on three separate pages of the online Plate order process in underlined, blue, contrasting text. This contrasting text is sufficient to be considered conspicuous under Hubbert, even though the Terms are only linked three times instead of five times, because it is not the repetition of the display of a term that is determinative but the contrast of a term.

So now we have two court rulings (at least) for the proposition that hyperlinks are sufficiently conspicuous to be used to supply additional terms for an online contract.

These cases demonstrate the power of an apt metaphor when applying old law to new technology. Before encountering these decisions, I had always considered placing additional contract terms behind a hyperlink as somehow "hiding" them from the other party -- an unfair way of dealing. Behind a hyperlink. Sounds like under the rug. But if you embrace the metaphor that hyperlinks are the customary way of "turning a page" online, then it doesn't seem unfair at all to expect parties to "turn" each "page" of their online contracts. Kudos to the lawyer who came up with that metaphor.

Comments

[Mehmet Munur]

PDC Labs could have avoided some of the issues by including a clickable button in Step 4 of 4 of the ordering process. The court appears to agree with that contention as well. However, the court also states that “[c]lickwrap” cases differ greatly from hyperlink cases.” This is no longer the case.

At one time, much ink had been spilled over the difference between the two, and the tests that should be applied to each. Two years ago, however, we observed that courts were not paying much attention to the once much-mooted distinction between browsewrap and clickwrap. Instead, the focus of recent judicial opinions has been on notice—did the seller provide a reasonable amount of information to the buyer so that the buyer could know for what, if anything, it was contracting? This year’s cases continue that trend.

Juliet M. Moringiello & William L. Reynolds, Survey of the Law of Cyberspace: Electronic Contracting Cases 2007–2008, 64 Bus. Law. 199 (2008). Frankly, I think the last thing the literature on online contracting needs is another metaphor. However, the court’s analysis focuses on the issue of notice through the “conspicuousness” of the terms.

Additionally, the case highlights the importance of using the correct language when incorporating any document into a contract. Instead of stating "[r]eview terms, add any comments, and submit order," PDC could have included a radio button with the text "I have and agreed to the Terms and Conditions.” Newegg employs this method. In its absence, PDC Labs could have done what Amazon does with its ordering process. At the top of each order page, Amazon states "By placing your order, you agree to Amazon.com's privacy notice and conditions of use." Such a statement makes the terms more conspicuous than simply using language to review . It also alerts the website visitor to the importance (and consequences) of the legal documents.

Simply including hyperlinks in a contract without the appropriate incorporation language can result in disastrous consequence, however. See Affinity Internet Inc., v. Consolidated Credit Counseling Services, 920 So. 2d 1286, 1287 (Fla. Ct. App. 2006), and Manasher v. NECC Telecom, No. 06-cv- 10749 (E.D. Mich. Sept. 18, 2007) and our comments http://www.tsibouris.com/TA%20Update%20Oct%202007.pdf

[Thomas O'Toole]

Thanks for these comments, Mehmet. Here are the links to the Affinity Internet and Manasher cases you mentioned. I think it's important to note that both of these cases involved print contracts referencing Web terms, whereas PDC Laboratories involved a Web contract referencing additional Web terms, though for some folks this is not an important distinction. And I agree with you that the judge's remark that "[c]lickwrap cases differ greatly from hyperlink cases" was a sour note. I wish he had thought a little harder about that one. Prof. Moringiello's discussion of the Hubbert and Affinity Internet cases can be found in this 2005-2006 caselaw survey.