“I agree” buttons can create obligations you don’t like. When a user signs up for an Uber Technologies Inc. account, the user has to click on a button that says “By creating an Uber account, you agree to the TERMS OF SERVICE & PRIVACY POLICY.” The capitalized phrase has a hyperlink in bright blue and underlined, which links to another screen containing a button that allowed users to view Uber’s Terms of Service and Privacy Policy. Uber’s Terms contain a mandatory arbitration clause. Travis Kalernick signed up for an Uber account. He brought a class action suit in New York District Court against Uber alleging that Uber’s pricing algorithm violated antitrust laws. Kalernick claimed he didn’t recall seeing or following the hyperlink to the Terms and so he shouldn’t be bound by the arbitration clause. Uber brought a motion to dismiss the case to enforce the arbitration clause. Uber lost the motion at the trial level but the Second Circuit Court of Appeals reversed and remanded the case back to the trial court. The problem for Uber is that before it brought the motion, Uber had begun exchanging discovery materials with Kalernick. This means that Uber may have waived the arbitration clause.

WHY YOU SHOULD KNOW THIS. The enforcement of on-line terms and conditions has been problematic for courts. The amorphous quality of an on-line terms and conditions means there is no signature demonstrating agreement, no version control and no way to verify that a party actually read the terms. So, many courts have come up with a test for enforceability. The primary components are that (1) the terms and conditions have to be easily accessible; and (2) the user has to do something affirmative to show agreement. According to the Second Circuit Court of Appeals, Uber was able to show both components in this case. Of note is that Kalernick couldn’t have created his Uber account without agreeing to the terms. So Kalernick’s faulty memory about it was not an excuse. Alas, Uber may have won the battle and lost the war by participating in the litigation before it sought to enforce the arbitration clause.

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