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Hill v. Gateway 2000, Inc. | 105 F.3d 1147 (1997)
Modern commerce happens quickly, and often, remotely. People purchase products by phone, or they order online from a website. But the vast majority of consumers never get to negotiate the contract terms governing those sales. And when their purchase arrives, it often comes with a lot of paper: receipts, instructions, troubleshooting guides, and most importantly, contract terms. If buyers never expressly agree to these terms, and rarely even read them, how are they enforceable? In Hill versus Gateway 2000, the Court of Appeals for the Seventh Circuit endeavored to solve that puzzle.
Rich and Enza Hill responded to an advertisement offering Gateway 2000 computers for sale. They called the listed telephone number and ordered one, to be delivered to their home. In due course, a box arrived, containing the computer, accessories, and a printed list of sales terms. One of the terms was an arbitration clause. The document stated that the enclosed terms governed the sale unless the customer returned the computer within thirty days. The Hills kept the computer for longer than that, but they repeatedly complained to Gateway about it. Ultimately, Gateway wasn’t able to resolve the issue. The Hills were left very unsatisfied customers.
The Hills sued Gateway in Chicago’s federal district court. Pursuant to the sales terms, Gateway sought to refer the case to arbitration. The Hills protested that they hadn’t even noticed the arbitration clause. The district court held that the Hills didn’t agree to the arbitration clause, and refused to enforce it. Gateway appealed the judge’s order to the Court of Appeals for the Seventh Circuit.
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