Getting a Bad Rap? Unconscionability in Clickwrap Dispute Resolution Clauses and a Proposal for Improving the Quality of These Online Consumer 'Products'

Abstract

After years of ready acceptance of click-wrap agreements on web sites, some state courts are now beginning to invalidate dispute resolution clauses in the terms of use of web sites as unconscionable or in violation of public policy under contract principles. The recent case law invalidating clickwrap dispute resolution clauses is a troubling development, not only for e-commerce businesses seeking certainty and uniformity in transacting over the Web, but for the entire dispute resolution field. For decades, scholars, educators and practitioners have promoted the positive benefits of alternative dispute resolution (ADR) and online dispute resolution (ODR). Both ADR and ODR are touted as saving disputants’ time and expense, opening the lines of communication between conflicting parties, aiding in reaching more collaborative party-driven outcomes, reducing overburdened court dockets, and successfully leveraging the third party expertise of mediators, arbitrators, and private judges that might not be found in the current judicial system. With all of these potential benefits to individuals and the judiciary, it seems paradoxical that consumers are challenging these ADR/ODR clauses and that courts are willing to strike them down as unconscionable or violations of public policy. These persistent challenges to dispute resolution clauses suggest that the general public does not perceive the benefits of ADR/ODR and may view ADR/ODR as just another legal roadblock thwarting the fair, convenient and inexpensive resolution of online disputes. The rising discord in the state courts over ADR/ODR provisions in clickwrap agreements suggests that the time has come to reassess issues of fundamental fairness and good public policy in the crafting of ADR/ODR clauses in online transactions. This paper considers dispute resolution clauses in a variety of online settings, including online consumer services, software downloads and virtual worlds. This article proposes that clickwrap agreements should not be treated as contracts, but as “products” (building on the earlier proposal of Prof. Arthur Allen Leff) for which minimum quality standards need to be established for dispute resolution provisions. This article also recommends simplified disclosure approaches better suited to typical user browsing habits in the online world, including the development of straightforward disclosure tables and a rating system to provide fast and ready identification of online merchants offering quality dispute resolution clauses in clickwrap agreements. This blend of minimum quality standards with simplified online disclosures will provide more accessible information to online consumers as well as help to motivate greater competition between online sellers to offer more highly-rated conflict resolution methods, thereby elevating the overall quality of dispute resolution clauses in the online world.