Court says clicking online button makes arbitration agreement binding

A federal court considering California contract law has ruled that an arbitration agreement presented in an online click-through form is contractually valid.

Recent case: Chadrick applied to attend an art school and was accepted. As part of his enrollment, he was instructed to sign up for an email account and read through a series of online documents. One of them was an arbitration agreement. He clicked the online button to indicate that he accepted the terms and enrolled.

Later, he was expelled after what he claimed was an unfair investigation into accusations of assault on his former girlfriend, also a student at the school. He sued in federal court, but the school said the case belonged in arbitration.

The court agreed, stating that under California contract law, Chadrick had accepted the terms of the arbitration agreement and that there was nothing unconscionable about the way it was presented. (Baker v. The Academy of Art, ND CA, 2017)

Final note: Although this is not an employment case, the principles of contract law apply to California work settings, too.

Employers that want to move their employment applications and other new employee documents online can rest easy knowing California contract law will likely require applicants to abide by the terms they click to accept.

As always, the underlying arbitration agreement must meet other California contract rules. Have your attorneys review or draft the agreement before putting it online.