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Hines v Overstock.com, Inc.

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Bloomberg Law

Citation. 668 F. Supp. 2d 362 (E.D.N.Y 2009)

Brief Fact Summary. a class action was purportedly brought against Overstock.com, Inc. (Overstock) (D) for charging a restocking fee by Hines (P), a consumer, contending that the fee had never been disclosed. But Overstock affirmed that arbitration of all issues, including the transfer to a different forum was backed by the contract governing the transaction. Hines (P) alleged that the terms were unenforceable on the ground that she had no notice of the terms and conditions and that any reasonable user would have seen the seen the terms if it had been on the website.

Synopsis of Rule of Law. a user is not bound to the terms and conditions of an online contract he/she had not been notified of, and this also includes a reasonable user of the website who have not seen the terms and conditions.

Facts. Hines (P) returned a vacuum cleaner she had bought from an on-line “closeout” retailer named Overstock.com, Inc. (Overstock) (D) and was given back the amount in which she bought the vacuum cleaner with after a $30 restocking fee was effected. Due to this, Hines (P) brought a purported class action against Overstock (D) in the federal district court in New York for breach of contract, fraud, and other grounds, challenging the restocking fee. Her reason for returning the vacuum was based on the advice which she received that she would suffer no cost upon the return of the vacuum cleaner and that the fee that was deducted by Overstock (D) was never disclosed.
According to Overstock (D), all its online purchases were governed by its terms and conditions and required that all disputes would be resolved through arbitration as well as a transfer to a different forum which was the state court in Utah. Hence, Overstock (D) prayed the court should dismiss the suit, stay for arbitration or transfer the suit. But Hines (P) argument was that she had no seen the terms and conditions when she had made the purchase of the vacuum cleaner and that a reasonable would have seen such terms and conditions, and as such, it was not enforceable. She further explained that the terms and conditions in question could only be seen by a user who scrolls down the page(s) and that there was no need for her to scroll down the pages because she was directed each step of the way to click on to a bar to take her to the next step to complete the purchase. The district court however ruled on the motion.


Issue. is a user bound to the terms and conditions of an online contract he/she had not been notified of including a reasonable user of the website that have not seen the terms and conditions?

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