Mobile App Terms and Conditions Decision Clarifies Best Practices in App Designs to Support Enforcement of Contract ProvisionsThe Second Circuit issued a decision of interest to every company that utilizes a mobile app to interact with its customers. In Meyer v. Kalanick, the court enforced the mandatory arbitration provision in the Uber app. The court considered the app from the perspective of a “reasonably prudent smartphone user” and discussed parameters supporting enforceability of contract terms for mobile apps. The Second Circuit enforced the arbitration provision because the Uber app gave the user reasonably conspicuous notice of the Terms of Service (which included the arbitration provision), and the user gave unambiguous (albeit not express) consent to arbitration in light of the objectively reasonable notice of the terms.

Due to the ubiquity of smartphones and smartphone apps, the Second Circuit analyzed the Uber app from the standpoint of a reasonably prudent smartphone user who would understand the use of hyperlinks. Uber’s “uncluttered” payment screen contained the warning that “By creating an Uber account, you agree to the TERMS OF SERVICE & PRIVACY POLICY.” The court explained that the “capitalized phrase is bright blue and underlined and contains a hyperlink to a third screen containing a button that, when clicked displays the current version of Uber’s Terms of Service and Privacy Policy. The text, including the hyperlinks to the Terms and Conditions and Privacy Policy, appears directly below the buttons for registration.” The entire screen, including the notice of the Terms of Service, was visible without scrolling. The court noted that the sentence is in small font, but “the dark print contrasts with the bright white background, and the hyperlinks are in blue and underlined.” The court appreciated the simplicity of the payment screen, which included only credit card fields, buttons to register for a user account or to connect pre-existing accounts to the Uber account, and the warning with the hyperlink.

The court explained that a reasonably prudent smartphone user would understand that text that is highlighted in blue and underlined is hyperlinked to another webpage with additional information, and found the screen design and text reasonably conspicuous, thus giving the user constructive notice of its terms. The court also described the payment screen and Terms of Service as “temporally coupled” because Uber provides the Terms of Service during enrollment. The court concluded that “a reasonably prudent smartphone user would understand that the terms were connected to the creation of a user account.”

The court distinguished the Uber screen from the Amazon screen in Nicosia v. Amazon.com, Inc., because the Nicosia screen contained much more information and several buttons, and the notice of terms and conditions was not adjacent to the consent button: “This presentation differs sharply from the screen we considered in Nicosia, which contained, among other things, summaries of the user’s purchase and delivery information, ‘between fifteen and twenty-five links,’ ‘text . . . in at least four font sizes and six colors,’ and several buttons and advertisements.  Nicosia, 834 F.3d at 236-37. Furthermore, the notice of the terms and conditions in Nicosia was ‘not directly adjacent’ to the button intended to manifest assent to the terms, unlike the text and button at issue here.  Id. at 236.”

The Uber app decision provides useful guideposts for designing user interfaces for smartphone apps that include contractual terms, such as arbitration clauses: (1) implement a simple design with minimal text and few buttons; (2) ensure the visibility of the entire screen, including the hyperlink to the contract terms, without scrolling; (3) expressly warn that by creating an account, the user is agreeing to be bound by the linked terms; and (4) require agreement to the contract terms during enrollment (ideally before completing enrollment, but not later than simultaneously with enrollment).  Although the Uber app did not do so, smartphone apps can also require the user to scroll through the governing terms and conditions before accepting them to further support enforceability of those terms and conditions.

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