Monday, April 08, 2019

Contracts -- A New Spin on the "Battle of the Forms" Conundrum

By Jonathan Spigel

In most first-year law school Contracts courses, law students learn about the practical business conundrum of the “battle of the forms,” where a prospective buyer and seller exchange written proposals to buy and sell goods and/or services in the hopes of reaching the offer-acceptance-consideration formula necessary for a valid contract.  These forms, which often include purchase orders, bills of sale, invoices, etc., often have boilerplate language (i.e., the small print on the back or somewhere in the documents) that can address important issues such as whether any disputes will be arbitrated, the contracting parties’ indemnification duties and rights, as well as the controlling law or venue for any such disputes.

Are “Additional Terms” on a Website Binding?

Last month, the Dallas Court of Appeals addressed this very issue, but with a new spin:   What if the business documents contain a reference to a website that has additional terms and conditions?  Do those terms form a binding part of the contract as well?  In the case of In re Freightquote.com, the appellate court answered the last question “no” under the facts of that case.

In re Freightquote.com

In re Freightquote.com was a mandamus decision based upon a forum-selection clause that an on-line, Missouri-based freight broker sought to enforce against its Texas customer.  The customer and freight broker had engaged in at least 134 prior shipments before the subject shipment was not delivered and led to litigation.  The customer received two e-mails from the freight broker after booking the shipment.  Each e-mail had a hyperlink to the freight broker’s terms and conditions, but the link was placed beneath the freight broker’s contact information with no instruction to open the link.  The confirming bill of lading also stated that the customer agreed to the freight broker’s terms and conditions that could be found at a stated website.  Missouri choice-of-law and forum-selection clauses were included in the website’s terms and conditions, which the freight broker sought to enforce when the Texas customer sued it in state district court in Dallas over the non-delivered shipment.

The Dallas Court of Appeals held in a 2-1 split-panel decision that the placement of the hyperlinks in the confirming e-mails and the reference to a related website in the bill of lading were too general and non-specific to be binding on the Texas customer.  More specifically, there were no instructions to open the hyperlinks in the e-mails and none in the related website reference in the printed bill of lading (which also had undefined terms such as “Customer” and “Organization”).  Based upon these facts, the appellate court held that the freight broker was not entitled to mandamus relief and had to defend itself in a Dallas, Texas state district court applying Texas law. 

Show Me the Links!

The moral here is that if you want Missouri forums and law to control business disputes, you have to “show me” more than some ill-placed links in e-mails and general, vague references to websites in bills of lading.          
 

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