The Santa [Clara] Clause

If you’re doing any kind of business online — as a buyer or a seller — the Appeals Court here in Massachusetts has just issued a decision you should know about. It concerns forum-selection clauses, those boilerplate terms that tell you that no matter where you live, the one and only place you can sue is, say, Santa Clara, California.

A few days ago the Appeals Court declined to uphold a forum-selection clause that was part of a contract Yahoo! provided in connection with e-mail accounts.  The case started when the administrators of a deceased Yahoo! email account owner asked the Massachusetts Probate & Family Court to rule that the estate should include the contents of the email account.  Yahoo! tried to dismiss the case saying the Massachusetts courts lacked jurisdiction because of the forum-selection clause, which provided that all disputes had to be litigated in Santa Clara, California. The Probate & Family Court sided with Yahoo!, but the Appeals Court reversed the decision.

Unlike many online contracts, this one was a browsewrap agreement, i.e. it did not require the user to click “I agree.” The Appeals Court held that the clause was too broad (in that it covered every kind of dispute, even those not related to the email account) and did not bind the administrators of the estate.

Unless and until the Supreme Judicial Court rules otherwise, the lesson is this: the courts in Massachusetts will not automatically enforce forum-selection clauses in browsewrap agreements. So if you’re an online merchant, it might be better to opt for a click-wrap instead, and (counter-intuitively) don’t make the agreement too broad. It’s one more step for the consumer, but that is the price of enforceability, for the time being anyway.

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