Starkey v. G. Adventures—Enforcing Contract Terms
On August 11, 2015, in Elizabeth Starkey v. G. Adventures, Inc. the US Court of Appeals for the Second Circuit upheld the district court’s decision to enforce an exclusive jurisdiction provision contained in G. Adventures’ standard terms and conditions that required all matters arising from its services to be litigated in Canada. In upholding this provision, the court provided further insight into the factors that will be considered regarding enforcement of terms in form contracts.
Typical of many commercial transactions, the terms for the Galapagos trip that was the subject of the litigation was confirmed via email, and the terms were provided as a hyperlink rather than in printed form. The plaintiff booked her trip on the G. Adventures website, and shortly thereafter, G Adventures sent her three emails: a booking information email, a confirmation invoice, and a service voucher. Each of the emails contained a statement that the passenger must read and agree to G. Adventures’ standard terms and conditions (which contained the exclusive Canadian jurisdiction provision) and a hyperlink to such terms.
The plaintiff argued that she had never clicked the hyperlink or read the terms that G. Adventures was attempting to enforce and that requiring her to litigate the dispute in a foreign country was overly burdensome. However, the court held that the defendant had reasonably communicated the jurisdiction provision to the plaintiff through the use of the three emails and the clear language contained in the hyperlinked terms and conditions. Specifically, the court decision provides three insights into steps to take to enforce standard terms and conditions that are provided electronically:
Acceptance of Terms and Conditions. In this case, the defendant did not use the standard “I Accept” “click-wrap” agreement used in many electronic transactions (see further discussion below). Therefore, the court stated that it was a “somewhat close call” whether the terms had been reasonably communicated. However, the fact that the company provided three separate emails that each highlighted the required acceptance of the terms overcame the plaintiff’s claim that she had never read the terms. Therefore, all website and email communications should be reviewed to ensure that they highlight any acceptance requirement.
Highlight Important Provisions. The court also noted that the provisions of the terms and conditions were clear that disputes were required to be litigated in Canada. In addition to the standard jurisdiction provision (which was one line long in plain English), the introductory section of the terms and conditions specifically provided that “these Terms and Conditions affect your rights and designate the forum for the resolution of any and all disputes.” Therefore, standard terms and conditions should be reviewed to ensure that they highlight provisions that are important, particularly provisions that courts may be reluctant to enforce, like exclusive jurisdiction requirements.
Use “Click-Wrap” Agreements. As indicated above, the court noted that G. Adventures had not used a “click-wrap” agreement in which a customer is required to specifically check that he or she has accepted a company’s terms and conditions and that the case would have been simpler to resolve if the defendant had used such a mechanism. In fact, the G. Adventures website now includes a specific click-wrap mechanism and provides the terms and conditions within a box as part of its booking page. Both of these steps are clearly best practices and should be employed wherever possible.