Specht v. Netscape Communication Corporation, 306 F. 3d 17 (2nd Cir. 2002). I. FACTS Plaintiffs sued, Netscape, a software internet company who distributed the free software SmartDownload, for electronic eavesdropping. The Plaintiffs alleged Defendant violated two federal statutes, the Electronic Communications Privacy Act and the Computer Fraud and Abuse Act, by capturing private information about files downloaded from the Internet . Plaintiffs filed suit against Defendant in District Court and Defendant moved to dismiss the case and compel arbitration.
Defendant alleged that Plaintiffs had agreed to arbitrate any and all claims through their acknowledgment of the terms and conditions in the license agreement on the Web page. However, Plaintiffs were never required to read the entire terms and conditions prior to downloading the software. The District Court found that the downloading of the software did not constitute an acceptance of Defendant’s terms because there was no reasonably conspicuous notice. Defendant appealed. II. ISSUE
Whether the Plaintiffs agreed to be bound by the Defendant’s licensing agreement terms when they downloaded the free software and plug-in, whereby agreeing to arbitration? III. RULE In order for a contract to become binding, both parties must assent to be bound. “[C]ourts have required that assent to the formation of a contract be manifested in some way, by words or other conduct, if it is to be effective. ” E. Allan Farnsworth, Farnsworth on Contracts § 3. 1 (2d ed. 2000). “To form a contract, a manifestation of mutual assent is necessary.
Mutual assent may be manifested by written or spoken words, or by conduct. ” Binder v. Aetna Life Ins. Co. , 75 Cal. App. 4th 832, 850, 89 Cal. Rptr. 2d 540, 551 (Cal. Ct. App. 1999) (citations omitted). IV. ANALYSIS Online contracts must be held to the same standards as other written documents and terms therein must also be conspicuous. A consumer’s clicking on a download button does not communicate assent to contractual terms if the offer did not make clear to the consumer that clicking on the download button would signify assent to those terms.
Because the plaintiffs were not put on notice of these terms they were not bound by them and, therefore, not subject to arbitration. V. CONCLUSION Plaintiffs were not bound to arbitration or to any of the terms of the license agreement as they did not read, accept or agree to those terms as a precondition to downloading the software. VI. HOLDING The Court held that a reasonably prudent consumer would not assent to contractual terms that are so inconspicuous that they could completely overlook them. Licenses are not enforceable if there is not reasonable notice and assent of that license.
