02 June 2010

Enforceability of Vendor On-Line Terms After Written Contract Execution

National Auto Lenders, Inc. (NAL) purchases installment contracts from retail car dealers in Florida, thus enabling indirect consumer loan purchases for cars. NAL contracted with SysLOCATE to purchase over 2,000 GPS units to track vehicles covered by its loans on SysLOCATE's website SysLOCATE makes available to its customers. Unfortunately, many of these units turned out to be defective, thus frustrating NAL's ability to locate and repossess vehicles of owners in default. While the parties were trying to resolve their dispute, SysLOCATE changed the terms of its online click-accept access contract that would have effectively limited NAL's ability to recoup its losses, and that would require binding arbitration as a means of resolving disputes. NAL's executives, upon learning of these new on-line terms, instructed SysLOCATE that only certain named individuals have authority to bind NAL to the terms of any contract, including any online click-accept agreement.

Despite this, two NAL lower-level employees subsequently click-accepted the terms of SysLOCATE's online agreement. After NAL filed a lawsuit against the successor-in-interest to SysLOCATE, the latter predictably filed a motion to dismiss in favor of binding arbitration. NAL resisted such motion by arguing that these two lower-level employees lacked apparent authority to bind NAL to the new online terms containing the binding arbitration clause.

In National Auto Lenders, Inc. v. SysLOCATE, Inc. (S.D. Fla. Feb. 10, 2010), the district court agreed with NAL and denied the defendant's motion. The court ruled that the two lower-level individuals at NAL lacked apparent authority because NAL made clear that only certain executive level personnel have authority to bind the company to such terms. The court stated, "The reliance of a third party on the apparent authority of the principal's agent must be reasonable and rest in the actions of or appearances created by the principal ...." (citations omitted).

Vendors frequently deliver products, technologies or services online, even if the original contract between the vendor and the customer is a traditional written – and usually heavily negotiated – document. As a result of the SysLOCATE decision, vendors may soon start seeing language in these written agreements clarifying who within the customer's organization has authority to bind the customer to subsequent online terms, so as to avoid any possibility for the vendor to alter the terms of the written agreement via subsequent (and perhaps inadvertent) acceptance of vendor online terms. Unless the vendor implements a mechanism to ensure that only such authorized customer personnel assent to the online terms, the vendor may find itself unable to enforce such terms against the customer altogether.

17 comments:

ShilaL_Kappler said...

Virtue dwells not in the tongue but in the heart. ............................................................

趙佳治 said...

Make yourself necessary to someone.............................................................

garner said...

哈>v<"" 感謝分享...................................................

禎峰 said...

you did a good job..................................................

溫淑芬 said...

你不能左右天氣,但你可以改變心情.............................................................

育財 said...

好熱鬧喔 大家踴躍的留言 讓部落格更有活力.....................................................................

vickiekurt said...

在莫非定律中有項笨蛋定律:「一個組織中的笨蛋,恆大於等於三分之二。」......................................................................

思翰思翰 said...

與人相處不妨多用眼睛說話,多用嘴巴思考.................................................................

文辰文辰 said...

所有的資產,在不被諒解時,都成了負債............................................................

11吳dennismattie俊易 said...

人生最可憐的是半途而廢,最可悲的是喪失信心,最遺憾的是浪費時間,最可怕的是沒有恆心。..................................................

怡潔怡潔 said...

要照顧身體歐~保重..................................................................

JasonBirk佳琪 said...

成功可招引朋友,挫敗可考驗朋友............................................................

宜潔宜潔 said...

字是活的,人和環境的觀察是活的,思想是活的。不管怎樣,就是要有一兩樣是活的。否則都是平庸。............................................................

姿柯瑩柯dgdd憶曾g智曾 said...

blog的用心,看得出來~~請加油............................................................

蔡靜芳蔡靜芳 said...

pleasure to find such a good artical! please keep update!!..................................................................

珮瑜 said...

值得一看再看的格子,多謝分享.................................................................

香昱信張君林 said...

Failure is the mother of success...................................................