In Berman v. Freedom Fin. Network, LLC, No. 20-16900, 2022 U.S. App. LEXIS 9083, at *12-14 (9th Cir. Apr. 5, 2022), the 9th Circuit addressed the enforceability of an arbitration agreement set forth on a website that allowed the consumer to click-through the operator’s various policies and the arbitration. The Court of Appeals stated the rule as follows:
The most straightforward application of these principles in the online world involves so-called “clickwrap” agreements, in which a website presents users with specified contractual terms on a pop-up screen and users must check a box explicitly stating “I agree” in order to proceed. See Nguyen, 763 F.3d at 1175-76. In that scenario, the consumer has received notice of the terms being offered and, in the words of the Restatement, “knows or has reason to know that the other party may infer from his conduct that he assents” to those terms. Restatement (Second) of Contracts § 19(2). As a result, courts have routinely found clickwrap agreements enforceable. See Meyer, 868 F.3d at 75. At the other end of the spectrum are so-called “browsewrap” agreements, in which a website offers terms that are disclosed only through a hyperlink and the user supposedly manifests assent to those terms simply by continuing to use the website. See Nguyen, 763 F.3d at 1176. Courts are more reluctant to enforce browsewrap agreements because consumers are frequently left unaware that contractual terms were even offered, much less that continued use of the website will be deemed to manifest acceptance of those terms. Id. at 1178 (noting “courts’ traditional reluctance to enforce browsewrap agreements against individual consumers”). To avoid the unfairness of enforcing contractual terms that consumers never intended to accept, courts confronted with online agreements such as those at issue here have devised rules to determine whether meaningful assent has been given. Unless the website operator can show that a consumer has actual knowledge of the agreement, an enforceable contract will be found based on an inquiry notice theory only if: (1) the website provides reasonably conspicuous notice of the terms to which the consumer will be bound; and (2) the consumer takes some action, such as clicking a button or checking a box, that unambiguously manifests his or her assent to those terms. See Meyer, 868 F.3d at 75; Nguyen, 763 F.3d at 1173 (refusing to enforce an arbitration provision to which the consumer “did not unambiguously manifest assent”). As the Second Circuit has explained, “[r]easonably conspicuous notice of the existence of contract terms and unambiguous manifestation of assent to those terms by consumers are essential if electronic bargaining is to have integrity and credibility.” Specht, 306 F.3d at 35. Defendants did not contend, in their motion to compel arbitration, that plaintiffs had actual knowledge of an agreement to arbitrate. And, as explained below, defendants failed to show that either of the conditions necessary for finding an enforceable agreement based on inquiry notice were satisfied.
The Court of Appeals found that the website rules failed the test.