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U.S. Court Finds Passing Reference in Invoice to Web based Contractual Terms Non-binding
A recent decision by the U.S. District Court in the southern division of the Eastern District of Michigan, has ruled that terms and conditions set out on a telecommunication company’s website but referred to in its customer invoice are non-binding.
Central to the case was the defendant company, NECC Telecom’s attempt to enforce an arbitration clause found in the company’s “Disclosure and Liabilities Agreement” which was posted on its website. While the court agreed that a contract may incorporate by reference terms and conditions found in a second document, the court found that the way in which NECC Telecom had done so was insufficient to render the referenced terms binding on the plaintiff customers.
One month after they verbally asked for, and began to receive, long distance services from NECC Telecom, the plaintiffs received an invoice which included information on accessing the company’s “Disclosure and Liabilities Agreement” via the company’s website or by requesting a copy by phone. The court ruled that there was no evidence of the plaintiffs’ affirmative indication that they agreed to the referenced terms. The court also found fault with the way in which mention of such terms was made to the plaintiffs; the reference was the last of five statements made on the second page of the invoice, the text was of plain type with no bold print to emphasize its importance and the words used failed to explicitly state that the agreement applied to the customers’ agreement with NECC Telecom.
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