Is Your SaaS Agreement Enforceable -- Even Against Simba, The Agreeable Cat?

by Chip Cooper

I thought I'd seen and heard it all in my Internet law practice, until a client referred me to an interesting article about a kitty cat named Simba that walked across a keyboard and clicked on an online, click-through agreement (also known as a "click-wrapped" agreement). The article is entitled "The Agreeable Cat", by Ann Loucks, and you can read it at http://www.ohesso.com/essays/essay006.htm.

My client wanted to know whether the agreement was enforceable. My reply - against Simba the cat, or its owner who put Simba up to this?

After a chuckle, I thought the question really had merit, and this is my analysis.

The Specht Case

The most significant case regarding the enforceability of online agreements is Specht v. Netscape Comms. Corp., a 2003 case in which the 2nd Circuit Court of Appeals upheld a district court decision that Netscape's online agreement was not enforceable. By holding that the agreement was unenforceable, the reasoning of the case provided specific guidelines for enforceability.

In the Specht case, Netscape's website developer designed its download page for Netscape's SmartDownload software with little regard for contract enforceability.

Netscape's download page provided a download button that triggered the download of the SmartDownload software. The only reference to a license agreement required the user to scroll to the bottom of the same web page which provided a link to the license agreement. Clicking on this link directed the user to another page which stated that use of the software was governed by a license agreement that required still another click before the user could read the contract terms.

The 2nd Circuit ruled that Netscape's agreement was unenforceable because of 3 deficiencies:

* the user did not have to click on an I ACCEPT button to indicate assent;

* the text on the web page accompanying the download did not clearly state that agreement was a pre-condition to use; and

* the failure to provide "reasonable notice" of the existence of contract terms.

The Register.com and Two Ticketmaster Cases

Three additional cases - the Register.com case and two Ticketmaster cases - when taken together with the Specht case, make it clear that courts are most likely to enforce online agreements where the user gives express assent. Express assent is usually given by clicking on an I ACCEPT button.

Now we get back to the facts of the hypothetical case involving Simba the cat. Is the online agreement "accepted" by Simba enforceable against its owner who created the elaborate system for Simba to "agree"?

We'll leave enforceability against Simba out of our analysis, out of deference to the agreeable cat.

Simba's owner believes she has agreed to nothing. She states: "The download begins and I have personally agreed to nothing". In essence, she argues that since there is no express assent (by her), there is no binding contract.

Not so fast, according to Register.com, and the two Ticketmaster cases. These cases also stand for the proposition that absent express assent, assent may be inferred from proof that a defendant (i) had actual notice that use or access was conditioned on legal terms, and (ii) continued to use or access a site, service, or software after acquiring that notice.


Conclusion

In summary, the online agreement would be enforceable against Simba's owner if she had actual notice of legal terms and her use continued after acquiring that notice.

More important than the specific facts and result of the hypothetical case involving Simba the agreeable cat, are the fundamental principles that support virtually universal recognition that online agreements, provided they are presented properly, are generally enforceable, even in the absence of express assent -- a significant legal foundation upon which our Internet economy depends.


Chip Cooper is a leading intellectual property, software, and Internet attorney who's advised software and online businesses nationwide for 25+ years. Visit Chip's http://www.digicontracts.com site and download his FREE newsletter and Special Reports: "Determine Which Legal Documents Your Website Really Needs", "Draft Your Own Privacy Policy", and "Write Your Own Website Marketing Copy -- Legally". Copyright 2009 Chip Cooper