Specht v Netscape Communications Corp

Facts

• Netscape offered SmartDownload as a free utility on its website
• The download page had a "Download" button prominently placed
• A hyperlink labelled "Please review and agree to the terms of the Netscape SmartDownload software licence agreement before downloading" existed on the page, but below the fold
• Users could (and did) download without clicking the hyperlink or viewing the terms
• No clickthrough, checkbox, or "I agree" mechanism was required
• The licence terms contained a mandatory arbitration clause

Issues

1. Whether a browse-wrap licence (terms accessible via hyperlink without affirmative acceptance) creates a binding contract
2. Whether downloading software constitutes acceptance of licence terms the user never viewed

Held

• A contract requires mutual assent; mere availability of terms via hyperlink is insufficient
• A reasonably prudent user of the download page would not have had notice that downloading constituted assent to licence terms
• The hyperlink was not positioned where the user would necessarily see it before clicking "Download"
• The arbitration clause was unenforceable; motion to compel arbitration denied
• Contrast with click-wrap (requiring affirmative "I agree"): those are generally enforceable because they require manifest assent

Ratio Decidendi

Online contract formation requires the same mutual assent as offline contracts. Browse-wrap agreements fail when the terms are not conspicuously presented and the user takes no action that unambiguously manifests assent. The inquiry is whether a reasonably prudent internet user would have known that continued use or download constituted acceptance.