Clickwrap held enforceable.
Appliance Zone v. Nextag (2009)

Regina Rakipova

Appliance Zone is an e-commerce retailer distributing appliance parts through its website. Nextag, Inc. operates a comparison website, where it advertises goods of companies such as Appliance Zone. Nextag refers customers to the companies’ websites and charges fee for every referral.

Nextag uses a typical sign-up process for online contracting. During the registration process the user is required to accept the Terms of Service by selecting the check box on the web page. The agreement also explicitly states, that by accepting the Terms of Service the user is entering a legal agreement with Nextag.

An Appliance Zone employee signed up with Nextag and clicked through the online Terms of Service Agreement. Later an argument regarding trademarks arose, and Appliance Zone brought a trademark infringement suit against Nextag in Indiana. Nextag, being a California based corporation, argued improper venue due to the forum selection clause of the Agreement, i.e. the clause that covered where any litigation would be initiated. The clause specified that all lawsuits had to be brought in San Mateo County, California.

The plaintiff claimed that the contract was unenforceable because the employee, who had clicked through the agreement during the registration process, did not have the authority to enter into the contract. No evidence to support the claim of lack of contracting authority was presented. The court held that the employee had the apparent authority to bind the employer. The employee checked the box to manifest assent to the Nextag Terms of Service, uploaded the product descriptions and images onto the Nextag website, and Appliance Zone paid for the services. Therefore, acceptance of a valid contract was demonstrated. The court noted that the Nextag’s Terms of Service Agreement was typical for the online retail industry. It was clearly labeled, and it had a check box to confirm assent to the terms. Ironically, the court also noted that Appliance Zone used a similar registration process and similar contract terms on its own website.

As a result, the clickwrap agreement was upheld.

For more cases check Are clickwrap agreements held enforceable by American courts?

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