Massachusetts’ top court is looking at whether Uber gave a customer adequate notice he was signing a contract when it required him, before he could book a ride, to click a box agreeing to its updated terms of use.
It’s not clear how the Massachusetts Supreme Judicial Court will rule in a case that will be watched outside the state, but based on the back-and-forth during oral arguments last week, in-house counsel that want to take a safe approach to how their organization presents online contracts should probably use scrollwrap rather than clickwrap.
Scrollwrap requires signers to scroll to the bottom of the contract before they can click a button agreeing to the terms. Clickwrap can also take signers to the contract but it’s also possible to give signers a chance to agree to the terms without actually going to the document itself.
That’s the approach Uber took and it’s why the company is in court.
In a case the company lost in 2022 and is appealing, Suffolk County Superior Court Justice Debra Squires-Lee ruled Uber didn’t give a customer reasonable notice that he was signing a contract and a reasonable chance to assent that he would be bound by it.
Uber had lost a similar case in 2020, and in that case, called Kauders v. Uber, the Massachusetts Supreme Judicial Court set up a two-part test – for reasonable notice and assent – for there to be agreement in a click-to-agree online contract.
In this latest case, William Good v. Uber, the ride-share company updated its terms of use, in part to make sure its online contract met the two-part test in Kauders. But instead of alerting customers they needed to sign an updated contract to book a ride, the company encouraged customers to read the updated terms of use and it provided a link to the new contract.
However, customers didn’t have to click on the link to the contract; they just needed to check a box, and then a second “confirm” button, saying they read and agreed to the updated terms.
Good is a chef who was permanently injured when his Uber driver crashed in 2021. He sued the driver and Uber for $63 million in damages, but Uber moved to compel arbitration; by clicking the box for the updated terms of use, Good had agreed to waive his right to sue and had to arbitrate his claim as part of the new contract. In Good’s lower-court win last year, the court ruled that he wasn’t given reasonable notice or a chance to know what he was agreeing to.
Regardless of how the state’s top court rules, it’s a good bet scrollwrap is safer than clickwrap for organizations to present an online contract because customers can’t agree to it without actually scrolling through the document, making it harder for them to argue they didn’t know what they were agreeing to.
Lyft makes customers scroll through the contract, Matthew Wessler of Gupta Wessler, an attorney for William Good, told the judges during oral arguments.
“What Lyft does is, it sends out an email,” said Wessler. “It also, as part of its interface, delivers a popup – it’s been doing this since 2016 – that actually puts the terms in front of the user.”
In its terms of use, Uber makes clear at the top of the document that what customers have before them is a contract. But customers who agree to the terms without going to the document won’t see that.
“Someone’s trying to get a ride,” Massachusetts Supreme Judicial Court Justice David Lowy said during the arguments. “They got a message that says ‘Update,’ and they want their ride, and they can manage to get through all of that without ever seeing the terms and conditions to find out that this is actually an initial contract – not when they’re registering but when they’re trying to get a ride.”
Justices also had questions about Uber’s decision to present the update as “terms of use” rather than a contract.
“Interesting choice of words, right? ” said Justice Scott Kafker, who wrote the Kauders decision. “Basically, ‘We’re updating our app terms of use.’ … You’re entering into a contract…. Right? Whether it’s enough or not, I don’t know. But it’s not clear.”
Bottom line: The court will make its determination in this widely watched case, but in-house counsel that recommend that their organization use scrollwrap for their online contracts, and that the contracts be called contracts rather than something else, are taking a less risky approach than what Uber chose to do, the court’s line of questioning suggests.
