Establishing Digital Manifest Assent: The CuriosityStream Precedent on Online Arbitration Agreements

Introduction

The case of Rohan Dhruva; Joshua Stern v. CuriosityStream, Inc. presents a landmark decision by the United States Court of Appeals for the Fourth Circuit regarding the formation of online contracts and the enforceability of arbitration clauses. In this case, two California residents and subscribers to CuriosityStream challenged the enforceability of an arbitration provision embedded within the website's Terms of Use. They asserted violations related to privacy concerns involving the disclosure of personal data to third parties. CuriosityStream, on the other hand, moved to compel arbitration on the basis that the subscribers, during the registration process, were provided with sufficient notice of the contractual terms, including the arbitration clause. This commentary will delve into the nuances of the judgment, exploring the background, key issues, judicial reasoning, and potential ramifications of the decision.

Summary of the Judgment

The Fourth Circuit reversed the district court’s order denying CuriosityStream’s motion to compel arbitration. The Court held that when users registered for a CuriosityStream account, they were given adequate and reasonable notice of the contractual terms – including the arbitration provisions – through a clearly designed website interface. In particular, the Court noted that the prominent display of the "Terms of Use" hyperlink in orange text, positioned near the payment elements, along with explicit language stating that registration constitutes acknowledgment of the Terms, provided the necessary notice. Consequently, the act of clicking “Sign up now” was determined to objectively manifest assent to the arbitration clause and other contractual provisions, thereby validating CuriosityStream’s reliance on the Federal Arbitration Act.

Analysis

Precedents Cited

The judgment anchors itself in a well-established line of cases concerning online contract formation. Notable precedents include:

Marshall v. Georgetown Memorial Hospital – This case was pivotal in establishing that the principles of contract law apply even in the digital environment, where clear and conspicuous notice is required for a user’s manifestation of assent.
Naimoli v. Pro-Football, Inc. – Emphasized that a user must have reasonable notice and must manifest assent to be bound by contractual terms.
Henry Schein, Inc. v. Archer & White Sales, Inc. – Highlighted that a valid arbitration agreement exists when the Federal Arbitration Act’s requirements are met.
Modern Perfection, LLC v. Bank of Am. N.A. – Provided insight into how seemingly innocuous website design elements (like hyperlink color and placement) are evaluated in determining whether sufficient notice was given.

These cases collectively influenced the Court’s reasoning by reinforcing that the overall context and design of a website can constitute adequate notice of binding terms. The Court made clear that when an online user’s interaction with a website is coupled with conspicuously presented contractual terms, a valid contract is formed.

Legal Reasoning

The Court’s reasoning centered on two key principles of contract formation:

Reasonable Notice of the Contractual Offer: The payment and registration page was designed such that the hyperlink to the “Terms of Use” was unmistakable. The Court noted that the clear visual design – including the use of colored text and strategic positioning near the payment interface – met the traditional notice inquiry in the internet context.
Manifestation of Assent Through Conduct: Rather than requiring an explicit “I agree” checkbox, the Court held that the act of clicking “Sign up now” provided objective evidence of assent. The language on the website, which stated that "registering with [the website] signifies that you agree" to the terms, was considered sufficient to imply consent through conduct.

The Court balanced these principles within the evolving digital landscape where contract formation often occurs without the personal interaction typical of traditional contracts. By applying a “reasonably prudent internet user” standard, the decision reinforced that the digital environment does not excuse parties from the fundamentals of contract law.

Impact

This decision is significant for several reasons:

It clarifies that a user’s registration process on a digital platform, when accompanied by sufficiently clear notice mechanisms, is enough to create a binding contractual relationship. This may influence future disputes concerning arbitration clauses and other contractual terms embedded in online interfaces.
The ruling reinforces the enforceability of arbitration provisions in online contracts, which may encourage companies to continue including such clauses in their terms of use, provided that they offer clear notifications during the registration process.
It contributes to ongoing debates regarding consumer awareness in the digital age. While the majority opinion affirms that reasonable notice has been provided, the dissent highlights the need for even clearer presentations to ensure consumers are not unknowingly bound by terms that they may misinterpret as mere information.

Complex Concepts Simplified

Some of the legal concepts in the judgment can be clarified as follows:

Manifestation of Assent: In contract law, this term refers to showing consent not necessarily by explicit words, but through actions. In this case, the subscriber’s action of clicking “Sign up now” served as a clear sign that they agreed to the contract terms, including the arbitration clause.
Reasonable Notice: This means that the information about the contractual terms is presented in such a way that a typical user would reasonably understand that they are entering into a binding agreement. The website design and language are assessed to make sure that the user is aware of the terms.
Federal Arbitration Act (FAA): The FAA is a federal law that requires courts to enforce arbitration agreements. It ensures that if parties have agreed to arbitrate disputes, that agreement remains binding and must be honored.

Conclusion

In sum, the Fourth Circuit’s decision in Dhruva; Stern v. CuriosityStream, Inc. sets a pivotal precedent in the field of online contract formation. The Court’s ruling demonstrates that clear, conspicuous design elements and explicit language on a website’s registration page can ensure that users are properly notified of all binding terms, including arbitration clauses. This decision not only reinforces the enforceability of digital contracts under the principles of notice and assent but also underscores the evolving nature of contract formation in the internet era. While dissenting opinions caution against potential consumer confusion and argue for even more explicit consent mechanisms, this judgment ultimately affirms that, under current legal standards, a reasonably prudent internet user’s conduct — such as clicking a sign-up button — is sufficient evidence of their consent to be bound by the terms of a contract.

As digital transactions continue to expand, this decision will likely serve as a key reference point for future cases dealing with similar issues, balancing the interests of businesses seeking efficient dispute resolution and consumers' rights to be fully informed of the contracts they enter.