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Brower v. Gateway 2000, Inc., 676 N.Y.S.2d 569 (New York Supreme Ct. App. Div. [Aug.] 1998)


Following ProCD and Hill, the court here found that a shrinkwrap contract was formed when the plaintiffs retained the software for longer than the 30 day "approve or return" period. However, the court further held that certain contract terms relating to the arbitration provision at issue were not enforceable.


This case is similar to Hill and also involves the validity of Gateway's arbitration clause and the "accept or return" policy contained in a terms and conditions agreement included in the packaging of a mail or telephone ordered computer. The customers sued for deceptive trade practices and breach of warranty and contract, arguing, among other things, that the arbitration clause was a material alteration of the contract and therefore invalid under UCC 2-207, unconscionable under UCC 2-302 and an unenforceable contract of adhesion. The court rejected these arguments, concluding, as in ProCD, that the parties' contract was not formed when the order was placed but at the later date after the plaintiffs retained the merchandise beyond the 30 days specified in the Agreement, within which time the consumer has presumably read the agreement. The court did find, however, that the agreement's designation of certain arbitration specific procedures was not enforceable as the expense and inconvenience of that portion of the agreement would deter the consumer from seeking relief.

Copyright SRBC 1998 up