In the recent case of Century 21 Canada Limited Partnership v. Rogers Communications Inc. dba Zoocasa Inc., 2011 BCSC 1196, the Supreme Court of British Columbia held that a browse wrap agreement was enforceable. Though previous decisions have held that shrink wrap and click wrap agreements can be enforceable, this is the first Canadian decision to deal directly with the enforceability of browse wrap agreements.

The concept of a browse wrap agreement is that a visitor to a website signals his or her acceptance of the terms of use of that site merely by continuing to browse or access the site, provided the user has been given sufficient, prior notice of those terms of use.

Century 21 is a well-known real estate agency in Canada which operates a website at Century21.ca. The Century 21 website features property listings of its various realtor agents, together with extensive written descriptions and photos of such properties. In August 2008, Rogers Communications Inc. (“Rogers”) funded the start-up of Zoocasa Inc. (“Zoocasa”) and approached Century 21 for permission to access and post listings from the Century 21 site on the Zoocasa site. Zoocasa.ca is an aggregator website displaying real estate listings from multiple realty companies, operating in a manner similar to how Expedia™ and Travelocity™ operate in the world of online travel. Century 21 declined the request, but Zoocasa went ahead and started extracting listings from the Century 21 site anyway. Century 21 took exception to this and had its lawyers write to Rogers, warning them not to do this and bringing the Century 21 website terms of use to Rogers’ attention. The Century 21 terms of use prohibited the type of activity being conducted by Zoocasa, including automatic scraping, framing and indexing of data from the Century 21 site. Century 21’s terms of use were (and still are today) found via a small link at the very bottom of a lengthy home page. Other than that single link, there is no express notice of the existence of those terms of use on the home page and there is nothing on the home page which notifies a visitor that, by using the site, the visitor will be bound by those terms of use. The Century 21 terms of use include a browse wrap provision but a visitor to the website would not know that the site is governed by such a provision unless the visitor actually goes to the trouble of opening the terms of use through the link at the bottom of the home page.

In November 2008 and following further demands from Century 21’s lawyers, Zoocasa changed its practice and started posting only truncated listings from the Century 21 site. Century 21 continued to object to the use of Century 21 listings in any form on the Zoocasa site and filed a lawsuit in December 2008 alleging, among other things, breach of the website terms of use. Zoocasa continued its activities until March 2010, at which point it was posting listings from Century 21 only where it had express permission to do so from individual Century 21 agents.

While numerous issues were analyzed at trial (a review of which is beyond the scope of this article), the primary issues of interest were whether Zoocasa:

(a) entered into; and

(b) breached,

an enforceable contract

by accessing the Century 21 site and posting property listings from that site on its own site.

Mr. Justice Punnett of the British Columbia Supreme Court answered both questions in the affirmative. In a thorough judgment, the Court canvassed various 18th Century English “ticket” cases, which first established the principle that enforceable contracts can be entered into by parties through their actions, without signatures or a handshake. In those early cases, passengers on public transport were deemed to be bound by the terms printed on the back of tickets, where those terms had been brought to their attention prior to embarking on their journey. The Court also reviewed the recent history of electronic contracting, from shrink wrap to click wrap agreements and more recently, various U.S. decisions on the enforceability of browse wrap agreements.

Unfortunately, the decision may end up falling somewhat short in terms of its precedential value. The Judge held that he did not need to rule on whether or not adequate notice of the terms of use were given to Zoocasa at the time it accessed the Century 21 website, because Century 21’s lawyers had, during the fall of 2008, expressly directed Zoocasa to those terms of use. As a result, Zoocasa could not deny that it had received express notice of those terms of use and that it was therefore bound by those terms of use because it continued to access and use the Century 21 website after it had received express notice of those terms. This leaves open the question of whether the same result would have occurred without such express notice having been provided. The Judge also seemed to be somewhat swayed by the fact that Zoocasa had similar terms of use on its own site.

In the end result, Zoocasa was deemed to have had notice of the Century 21 terms of use since the Fall of 2008 and therefore was bound by those terms of use by continuing to access that site after that date. Zoocasa was also found to have breached those express terms of use by continuing to download and post content from the Century 21 site on the Zoocasa site, both in its full and truncated forms. The Court awarded a permanent injunction against Zoocasa’s actions in this regard, as well as nominal damages for breach of contract.

The Court was not persuaded by Zoocasa’s public policy argument, that enforcing a browse wrap agreement such as this would have a “chilling effect” on the open nature of the development of the Internet. The Court held instead, that if businesses are denied control of the information they post on their websites, they may be less inclined to use the Internet.

So what lessons are provided by the Century 21 case?

First and foremost, any party that operates a website should review whether or not that website should have terms of use. In some cases, for example, where a website functions merely as a static billboard and nothing else, terms of use may be of little value and not warranted. Where terms of use are warranted, they should make sense from the perspective of the content, functionality and likely users of that site. If it is important that content not be scraped, copied, framed, indexed or otherwise reproduced, then the terms of use should state this expressly. Ideally, terms and conditions of use should be in a click wrap format, requiring the user to acknowledge acceptance by some positive act, such as typing “I Agree” or something similar before the user is permitted further access to the site. In many cases, this is either impractical or undesirable from a marketing perspective. If a website owner is going to rely on a browse wrap agreement, then notice of the terms of use should be clearly brought to the attention of visitors to the site at the time they first access the site and the more direct that notice is, the better. For example, a website could employ a pop-up window which expressly puts the user on notice that terms of use are applicable to that site and that users should carefully review the terms of use as they will be deemed bound by those terms by continuing to access and navigate the site.

Second, employers need to be careful about what their employees are permitted to do on third party websites, even if those sites are only subject to browse wrap agreements embodied in their terms of use. As a result of the Century 21 decision, those employees may now be deemed bound by those terms of use and their employers therefore may be vicariously liable for any breach by those employees of those terms of use.