Citation. 513 F. Supp. 2d 229 [E.D. Pa 2007]
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Brief Fact Summary.
Feldman (P) argued that since he did not have notice of and assent to the terms of agreement with Google, Inc (D), there was no “meeting of minds” and so the online agreement which he must have clicked on before he could place internet ads on Google, Inc (D) was not binding. He also argued that because the agreement lacked definite essential terms as to price, it was unenforceable.
Synopsis of Rule of Law.
When an online user has been given reasonable notice of the agreement’s term and it is clear that once the user clicks on the acceptance “button”, the user agrees to be bound by those terms notwithstanding that the agreement does not include a specific price term, but describes with adequate definiteness, a practicable process by which price is determined, then the online clickwrap agreement becomes binding on the online user.
Feldman (P), a lawyer by profession, bought advertising from Google Inc’s (D) in order to attract potential clients for his practice. Each time an internet user searched and clicked on Google (D) for keywords or “Adwords” purchased by him, he would be charged by Google (D) for each click. Feldman (P) however held the view that he was a victim of “click fraud” which results when competitors or pranksters who are not interested in the services of the advertiser, repeatedly click on the ad. This practice thereby drove up the advertising costs of Feldman (P) and discouraged him from advertising.
This made Feldman (P) to file a suit against Google (D) in the federal district court of Pennsylvania on the ground that 20 to 30 percent of the clicks for which he had been charged by Google (D) were related to click fraud and that Google (D) had the capability to track and prevent such fraud.
However, apart from seeking to quash the charge against it, Google (D) also moved to have the case transferred to court in California on the premise that a forum selection clause in the Adwords online agreement-which Feldman (P) must have clicked on before he could place his ads through Google (D)-required disputes to be resolved in Santa Clara County, California. Furthermore, Feldman (P) asserted that he had clicked on the online agreement which was preceded by the statement “Carefully read the following terms and conditions. If you agree with these terms, indicate your assent below”. Apart from this, the first few paragraphs of this contract were visible on the computer window that an advertiser had the ability to read the entire contract by scrolling through it.
So, consent to the terms listed in the Agreement constitutes a binding agreement with Google (D) and this is stated in the preamble which is visible at first impression. Also available for advertisers who want a hard copy of the contract is a link to the printer-friendly version of the contract. The plaintiff however maintained that he had no notice to the agreement terms and that there was no mutual assent to the agreement. Feldman (P) further argued that because the agreement lacked a definite essential term as to price and as to when the contract was entered into, it was unenforceable. Google’s (D) motion was collectively treated as a motion for summary judgment by the court, which also rendered its opinion as to these cross-motions.
Is an online clickwrap agreement binding when an online user has been given reasonable notice of the agreement’s term and it is clear that once the user clicks on the acceptance “button”, the user agrees to be bound by those terms notwithstanding that the agreement does not include a specific price term, but describes with adequate definiteness, a practicable process by which price is determined?
(Giles, J.) Yes. When an online user has been given reasonable notice of the agreement’s term and it is clear that once the user clicks on the acceptance “button”, the user agrees to be bound by those terms notwithstanding that the agreement does not include a specific price term, but describes with adequate definiteness, a practicable process by which price is determined, then the online clickwrap agreement becomes binding on the online user.
As a novel matter, the determination of the effect given to a forum selection clause in diversity cases is governed by federal law since the issue is one of the procedural law rather than substantive law. Therefore when federal laws are applied, it only leads to the conclusion that the Adwords agreement was enforceable. A written contract will be enforceable if the parties had reasonable notice of the terms of the agreement and assented to (a clickwrap agreement, although digital, is considered a writing because it can be printed and stored). This is the basis upon which traditional contract principles are applicable.
With the exception of a fraud, the failure of a party to read an enforceable clickwrap agreement as with any binding contract will not excuse compliance with its terms. Reasonable notice of its terms has been given by the Adwords agreement. An advertiser or a user will have to visit a webpage which will display the agreement in a scrollable text box before an Adwords account could be activated. The text kf the Adwords agreement was immediately available to the user once the user visits the webpage, as was a bold admonition requesting the user to read the terms and conditions religiously, and with instruction to indicate assent if the user agreed to the terms. This implies that the Adwords account cannot be activated unless the user assents to the clickwrap agreement.
Feldma (P) must have had reasonable notice of the terms because a reasonable internet user would be aware of the existence of such terms in the Adwords agreement. He however indicated assent to the terms when he clicked on the “Yes, I agree to the above terms and condition” button. Therefore, it can be deduced that what an express contract required, in terms of reasonable notice and mutual assent have been satisfied. In addition to this, the premise upon which Felma (P) based his argument, that the agreement was unenforceable because a definite and essential term as price was not supplied was without merit.
The price term is an essential term of a contract and must be supplied with sufficient definiteness for a contract to be enforceable as required under the California and Pennsylvania law. But lack of definiteness does not primarily invalidate a contract where the parties have agreed on a workable method of arriving at the price in the contract with reasonable certainty. From this agreement, it is clear that a practicable method of determining the market price with reasonable certainty have been established by
Feldman (P) previously affirmed that there was an express contract between the parties before he “changed his tune” in an amended complaint by arguing that the express contract did not exist because the agreement was not valid. In place of his express contract allegations, Feldman (P) advanced the theory of implied contract on the ground that he did not have notice of and did not assent to the terms of the agreement and therefore there was no “meeting of the minds”.
An express contract arises when states their terms as against an implied contract whereby the parties do not state their terms. This distinction between an express and implied contract is based on the way the parties manifest their mutual assent and not on the legal effect. An implied contract cannot be said to exist when an express contract cover the same subject matter. Therefore, the court ruled that there could not be an implied contract between Feldman (P) and Google (D), because the contract between the parties had an express contract between each other and their agreement was reflected by the express contract’s term.