Second Circuit holds that arbitration provision did not become part of contract where plaintiff did not have reasonable notice of it and manifest his assent to it

Arbitration with salmon background

From Lexology, Christina Cerutti reports on a case in which the arbitration language was in a link in an email after the purchase and the court said the buyer did not have reasonable notice of it and did not agree to it. This case is a reminder of the importance of having parties clearly agree to arbitration agreements

On appeal, the court affirmed the district court’s decision and found that under the totality of the circumstances, Plaintiff was not on sufficient notice of the terms of the Post-Sale T&C, including its arbitration clause, and therefore did not manifest assent to those terms. The court offered several reasons for its decision.

Specifically, the court found that none of the various communications put Plaintiff on notice that his “Service Contract” would ultimately be delivered in the form of an obscure hyperlink, and that the email itself failed to provide such notice. While the email from SquareTrade contained a chart titled “Your Protection Plan,” none of its language directed Plaintiff’s attention to the hyperlink containing the Post-Sale T&C. The cluttered, diverse text, displayed in multiple colors, sizes and fonts, and featuring various buttons and promotional advertisements, further distracted the consumer from the relevant hyperlink, which was among the smallest text in the email. Nor did the SquareTrade email signal to Plaintiff in any way that he should click on the link, or advise him that the service contract would be found via the hyperlink. In fact, the second sentence of the email proclaimed to Plaintiff that “You’re all set!”—which encouraged him to look no further.

The hyperlink to the Post-Sale T&C was also neither spatially nor temporally coupled with the transaction. The hyperlink was spatially decoupled from the transaction because it was not provided near the portion of the Amazon purchase page requiring Plaintiff’s attention (i.e., the “Add to Cart” button), or anywhere else on the purchase page. The Post-Sale T&C were also temporally decoupled from the transaction because Plaintiff purchased the Protection Plan from the Amazon website, but had no way to review the Post-Sale T&C until he received the SquareTrade confirmation email.

The court noted it would have been “virtually costless” for SquareTrade to provide the governing terms and conditions to consumers before they purchased protection plans. The court also emphasized that while Plaintiff did have a duty to read the terms of the contract presented to him, he must have been put on notice of the existence of additional contract terms before it can be said that he has assented to them.

For these reasons, the court found that Plaintiff was not on sufficient notice of the terms of the Post-Sale T&C, including its arbitration clause, and could not manifest assent to those terms. Accordingly, the order of the district court was affirmed, and SquareTrade’s motion to compel arbitration was denied.

Read the full story at  Second Circuit holds that arbitration provision did not become part of contract where plaintiff did not have reasonable notice of it and manifest his assent to it – Lexology

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