Be careful what you click ‒ jurisdictional issues lurk when contracting online

By Ian Bloemendal, Nick Josey                       

28 Sep 2017

The Gonzalez case provides lessons at both business and consumer levels for online business.

Booking a hotel overseas through one of the many online booking intermediaries that operate in the modern age seems like a relatively innocuous activity - select a hotel, pay the nightly rate and the hotel is booked. What happens, however, if an incident occurs at the overseas hotel and you suffer loss and damage? Can you sue in Australia?

A recent decision from the Supreme Court of New South Wales, Gonzalez v Agoda Company Pte Ltd [2017] NSWSC 1133, demonstrates website terms are important (although vulnerable, if poorly addressed) and that filing a legal action may add insult to injury.

Mrs Gonzalez clicks and books

Mrs Gonzalez and her husband were planning a holiday in France and booked a hotel in Paris using the Agoda booking portal, which she accessed from her home computer in Sydney, Australia.

Agoda is a foreign company incorporated in Singapore.

When she booked through the portal, Mrs Gonzalez was asked for her personal information and payment details, and she was provided a link to Agoda's standard terms and conditions of booking as part of the "click and book" process. Agoda's standard terms included an exclusive jurisdiction clause that provided for:

  • the law of the contract to be Singaporean law; and 
  • all disputes to be submitted to the courts of Singapore.

After all information had been inputted, Mrs Gonzalez was invited to click a "book now" button, above which were the words:

            "I agree with the booking conditions and general terms by booking this room …”

Mrs Gonzalez clicked the button, the booking was finalised, and her credit card was duly charged. Unfortunately, two days after checking into the hotel Mrs Gonzalez slipped when exiting the shower and fractured several bones in her leg. She claimed that the shower screen in the bathroom had not been correctly fitted which caused soapy water to leak out and make the floor of the bathroom slippery.

She subsequently filed proceedings against Agoda in the NSW Supreme Court claiming damages under the Competition and Consumer Act 2010 (Cth), the Australian Consumer Law, and for breach of terms she said had to be implied into the contract with Agoda.

Jurisdictional issues raised: Singapore or Sydney?

Agoda asserted, amongst other matters, that the Court should not exercise jurisdiction, as it was a "clearly inappropriate forum" in which to hear the matter in light of the exclusive jurisdiction clause.

Mrs Gonzalez argued that the exclusive jurisdiction clause had not been incorporated into the terms of the contract between the parties. In particular, she emphasised:

  • she was not required to "tick a box" explicitly accepting the terms; 
  • there was no identifiable signature indicating explicit agreement to the terms; 
  • there had not been "reasonable sufficient notice" of the terms, nor any prominently displayed "I agree" button to be clicked; 
  • the pronouns used during the booking process were confusing and ambiguous; and 
  • there was no explicit and readily seen statement about the hotel booking contact being subject to the laws of Singapore displayed on the website.

In the event that the exclusive jurisdiction clause had been incorporated, Mrs Gonzalez argued that there was still strong cause for the matter to be heard in New South Wales:

  • she had to care for her autistic grandson, so being in a foreign country for the proceeding would cause her considerable inconvenience (and expense); 
  • the witnesses she intended to call were all located in Australia, not Singapore; and 
  • Agoda would not suffer significant inconvenience if the matter were to be heard in New South Wales.

The Court's decision: Singapore or bust

The Court held that, on its face:

  • the contract contained an exclusive jurisdiction clause; and 
  • it was "very probable" that the clause was incorporated into the contract.

The Court noted, however, that it considered the fact that Mrs Gonzalez was not called upon to "tick a box" was significant but not determinative. In any event, it was held that the term was incorporated:

  • by signature (through Mrs Gonzalez clicking the "book now" button); and 
  • by reference (through Agoda's link to its standard terms and conditions).

The Court observed that there had been no attempt by Agoda to hide the terms, and any failure by Mrs Gonzalez to read them was not Agoda's fault. It was also not convinced that there was anything unfair about an international company such as Agoda attempting to protect itself by including such terms, nor that the factors identified by Mrs Gonzalez were sufficient to show that there was a strong cause not to apply the exclusive jurisdiction clause.

The Court said that if it were wrong and the clause had not been incorporated, it would allow the claim to proceed in New South Wales as Agoda had not shown that it was a "clearly inappropriate" forum, because:

  • all witnesses were located in Australia; 
  • Agoda had chosen to do business in Australia; and 
  • technology would resolve the majority of difficulties that Agoda might face as a foreign company litigating in Australia.

Key takeaways

With so much business occurring online, it is important to ensure that problems with a customer or contracting party manifesting their agreement to a contract or terms and conditions are minimised and contract enforcement terms are as clear as they can be - even if to avoid legal costs fighting over the terms as Agoda had to.

This case provides lessons at both business and consumer levels.

For business, care should always be taken in drafting and managing provisions that affect contract validation and authentication, mutual assent, law/jurisdiction notices and indemnities. Website terms and conditions should be located in a conspicuous place and it is good practice to evidence notification of the terms to a customer by "clickwrap" (where the website requires the user to affirmatively accept the terms of an agreement by asking them to click a button showing that they agree to the conditions) as opposed to "browsewrap" (where the agreement terms are identified as being located elsewhere on the website, sometime connected by hyperlink and reliance is placed upon actual or constructive notice of the terms and conditions rather than an affirmative manifestation of assent).

From a consumer's perspective:

  • you need to be aware of what you are agreeing to. While it is easy to simply click the "I agree" button or similar, thinking that it doesn't matter because you have to agree to get what you want, it remains worthwhile to skim the terms and conditions attached; and 
  • being aware of any relevant limitations of liability of other terms such as jurisdiction may be relevant to choosing to protect yourself with appropriate insurance, sometimes even offered by the website. (It is not clear from the judgment as to whether Mrs Gonzalez had travel insurance). 

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.