Everyone who has used the internet will be familiar with the 'click-wrap' contract where the customer is asked to click an 'Agree' button in order to buy products, access sites or obtain services. Some of the more observant may notice the 'terms and conditions' or 'Legal' section usually found at the bottom of web pages, though not many people actually read it. These are intended to put agreements in place between users of websites and their operators.
Yet while e-commerce is barely into its teens as a mass-market phenomenon, the law on forming agreements online is largely unchanged from the days when coin-op parking meters seemed futuristic. There are very few cases which deal with the effectiveness of website terms and conditions and whether or not they form part of legally binding contracts.
Perhaps because of this, last month's decision of the Irish High Court in a dispute between Ryanair and Billigfluege.de, a German price comparison website, has received lots of attention. Billigfluege was 'screen scraping' Ryanair's website to obtain and display price information for its users. Ryanair claimed that this breached its website's terms of use which are accessible from a link at the bottom of Ryanair's home page.In addition to a prohibition on 'screen-scraping', the terms stated that the Irish courts would have exclusive jurisdiction to hear any dispute arising under the agreement. The Court had to decide whether this clause constituted an agreement that Ryanair could to sue the German company in Ireland.
This was resisted on the grounds that the terms of use did not form part of a binding contract.Billigfluege had not agreed to the exclusive jurisdiction clause which simply sat within a set of terms Ryanair had prepared but which had not been agreed to.
That argument was rejected. The Court pointed out that the law does permit a party to impose terms on a "take it or leave it" basis where there is no anticipation of negotiation or haggling. By presenting the terms via a hyperlink from the home page, Ryanair had brought them fairly to users' attention and they were not hidden, concealed or difficult to find.
Interestingly, the Court did not look for evidence of positive conduct by site users – such as clicking on 'Accept' buttons or checking boxes – to indicate agreement to the terms.Conversely, some earlier U.S. cases cited in the judgment focused on site functionality, the layout of terms and conditions and the use of 'Accept' or 'Agree' boxes which users need to click as evidence of mutual agreement of the sort needed to establish a contract.
While quite a surprising case, its effect may be limited.It is an Irish decision and need not be followed in the UK, albeit the legal principles are more or less the same and in fact an earlier English case was relied upon in the judgment. Also, this case was concerned primarily with the preliminary issue of establishing jurisdiction and the effect of the 'exclusive jurisdiction' clause in the contract.It therefore only needed to explore contract formation issues to a limited extent. Some of the more substantive issues may be considered if the case progresses.
Moreover, the Court may have been influenced by the fact the site user was a commercial organisation using the site to generate revenues for itself in the course of trading without permission. It is possible that more would need to be done to bring the terms of use 'fairly' to the attention of an individual consumer or an organisation using the site for a non-commercial or more innocuous purpose.In any event, in the UK the Unfair Terms in Consumer Contracts Regulations do not generally permit exclusive jurisdiction clauses in consumer contracts to be enforced against a consumer.
For present purposes it is interesting to note that, at least in the Republic of Ireland, contracts governing the use of websites may come into existence more readily than has often been thought.
May 2010
Liam McMonagle, Partner