The rapid pace at which technology is progressing means more of us are ‘transacting’ in a global environment. International online contracts are common for businesses and consumers – whether we are purchasing fashion accessories through online retail outlets, subscribing to industry-specific software, or booking business flights or family holidays.
Traditionally, contracts were formed where parties or their representatives met and exchanged documents containing the terms of the agreement and their respective obligations. Now, many contracts are paperless, the parties never meet, and the agreement is accepted and completed with the click of a mouse.
A recent case illustrates that just because we no longer stand face to face it does not undermine the legal effect of our online transactions. It is important for businesses and consumers to understand the principles of contracting online and when an online contract or contractual provision may or may not be enforced.
Gonzalez v Agoda Company Pte Ltd  NSWSC 1133
Agoda Pte Ltd (Agoda) is a Singaporean-based company offering online booking services for accommodation worldwide.
Ms Gonzalez booked accommodation in Paris from her computer at her home in Sydney through Agoda’s booking portal.
Agoda’s ‘standard terms and conditions’ were contained via a separate link to the ‘payment details page’. The words, ‘I agree with the booking conditions and general terms by booking this room…’ appeared on the ‘payment details page’ above the ‘book now’ tab. Ms Gonzalez however was not required to ‘visit’ the ‘standard terms and conditions’ page nor check a box confirming her agreement to those conditions, before proceeding with the booking.
Had Ms Gonzalez read the terms of the agreement, she may have identified an exclusive jurisdiction clause which meant that the contractual laws of Singapore would apply to any disputes, which would be determined by the Courts of Singapore.
Ms Gonzalez suffered injury when she slipped and fell in the bathroom of the hotel during her stay. She commenced proceedings in the Supreme Court of New South Wales suing Agoda under Australian consumer laws, claiming damages and breach of contract.
Agoda argued that an Australian Court should not preside over the case in light of the exclusive jurisdiction clause.
Ms Gonzalez claimed that the exclusive jurisdiction clause did not form part of the contract because:
- she was not required to positively ‘tick a box’ accepting those terms;
- she was not given reasonable notice as Agoda had not sufficiently brought the terms and conditions to her attention;
- there was no identifiable signature confirming her agreement to the terms;
- there was no statement displayed on Agoda’s website confirming that hotel bookings would be subject to Singaporean laws.
Ms Gonzalez also argued other points regarding the inconvenience it would cause her to litigate her case in a foreign jurisdiction, based on her personal circumstances.
The Court determined that the contract did in fact contain an exclusive jurisdiction clause and it was ‘very probable’ that the clause formed part of the contract. The booking terms were not concealed and were, due to their location and ability to be readily accessed, available to Ms Gonzalez. Her ‘signature’ by clicking the ‘book now’ tab was sufficient for the purposes of the Electronic Transactions Act 1999 (Cth).
The Court also considered it was not unreasonable nor unfair for Agoda to protect itself by including an exclusive jurisdiction clause and it had not, on the facts, tried to hide such terms.
Of note, was the Court’s opinion that the fact that Ms Gonzalez was not required to ‘tick a box’ was ‘significant but not determinative’, to its findings.
Enforcing online contracts
Businesses operating in an online environment generally use click wrap or browse wrap agreements to incorporate terms and conditions into their contracts.
The business should be able to show through an electronic platform, that the customer intends to be legally bound by an agreement which is best achieved by bringing its terms and conditions to the notice of the customer.
The click wrap method involves the user selecting the desired product or service then, to proceed further, ‘checking’ acceptance of the terms and conditions which appear on the same page. The user must scroll through the terms and affirm agreement by pressing the ‘I agree’ or ‘I accept’ tab. The positive action of clicking on the acceptance tab is generally adequate to prove agreement to the contractual terms.
The browse wrap method is less effective as the terms and conditions are contained on a separate page, usually via a link. Such was the case in Agoda. The user is not required to read (or go to) the terms and conditions before proceeding and may choose to ignore them. The ‘notice’ requirement is therefore more difficult to prove.
In the Agoda case, the Court considered that it was probable that the terms were incorporated into the contract. In doing so however, the Court also noted that the fact that Ms Gonzalez was not required to tick a box was significant yet not determinative in its decision. In other words, it is arguable that the matter may have played out differently had other facts not weighed in Agoda’s favour.
Understanding online terms and conditions
For Ms Gonzalez, reading the terms of the contract may not have changed her mind about booking the hotel but may have at least alerted her to the limitations of liability through the exclusive jurisdiction clause. As such she may have contemplated how these risks might be mitigated, if at all possible.
A contract is unlikely to be avoided by denying it was purportedly created online or the agreement was not ‘signed’. The Electronic Transactions Act 1999 (Cth) specifically provides for the validity of electronic transactions and electronic methods used to identify and indicate a person’s intention with respect to the information communicated.
The case is a lesson for all online contract participants:
- for businesses, to review and use online agreements that bring terms and conditions to the notice of a customer and require a user to navigate through those terms and conditions before acceptance; and
- for consumers, to read and carefully consider the terms and conditions of online contracts and be aware of the limitations of contracts made under the laws of other jurisdictions.
If you or someone you know wants more information or needs help or advice, please contact us on 02 9790 7000 or email [email protected].