We have all done it. Clicked or checked the “I agree” box and agreed to terms, conditions or waivers just to get on the slopes, complete an online purchase or register our kids for sports or some other activity. Most people secretly think, “This can’t be legal anyway.” Well, in the words of Billy Joel, “You may be right.” However, in states like New Jersey, you may be wrong! Now, more than ever, businesses are streamlining their processes by relying more and more on electronic waivers and agreements, especially as a result of the COVID-19 pandemic. Business owners view online agreements and waivers as a quick method of completing the sale. However, business owners need to be mindful that these agreements could be loaded with possible pitfalls if they are not in compliance with state law.
If a click through agreement was to be disputed by a consumer, how would this play out in New Jersey court?
Enforceability comes down to how easily the terms can be viewed and agreed upon by the user. To dispense with the popular argument, the user (or consumer) cannot be relieved of their contractual obligations in New Jersey by arguing that they did not read the agreement before clicking “I agree” or affirming the terms. It’s a long standing principal in the Garden State that one cannot be relieved of their contractual obligations because they did not read the contract.
“Click the box” agreements and terms are not per se unenforceable in New Jersey because they are presented to a party in electronic form. The court will first consider the substance of the term at issue and the policy reasons in support of its enforcement. If the term at issue passes the first test, the court will then consider the mode of presentation of the term or how easily is it accessed and viewed by the user. It’s here that online terms and agreements run into trouble.
In order for terms of agreement to be valid in New Jersey, the term must be fairly presented and not submerged or concealed in a way that makes it difficult to find or access. For example, while clickwrap agreements or hyperlinks are also not per se unenforceable in New Jersey, a business will most certainly run into trouble if they start burying key terms in secondary agreements that the user must click on to view. Lastly, if a party tries to argue that “He made me an offer I could not refuse”, a.k.a. the adhesion contract argument, the court will likely uphold the term provided the above conditions are met.
To sum up, the language of each term of your electronic agreement must comply with New Jersey law and must be easily accessible to the user. To the furthest extent, avoid requiring the users to click on multiple agreements and links to complete the process. When in doubt, contact corporate attorney Chris Chiacchio, or any member of Flaster Greenberg’s Business and Corporate Department, to review your electronic agreements and waivers.
Chris Chiacchio is a shareholder in Flaster Greenberg’s Corporate Department. He provides small to midsized companies with guidance with their day to day operations, contract negotiations, and mergers and acquisitions. He can be reached at email@example.com or 856.382.2207.
This post originally ran on FG's Law Blog on January 4, 2021.