Hill v. Gateway 2000 United States Court of Appeals, 7TH Circuit 105 F.

3d 1147 (1997) Key Facts: The customers ordered a computer from the suppliers. The computer arrived, along with a list of terms said to govern unless the customer returns the computer within 30 days. Dissatisfied with its performance, they filed an action against the suppliers (after the 30 days), which alleged various claims. Procedural History: The suppliers sought enforcement of the arbitration agreement contained in the materials they shipped to the customers. The trial court denied their motion, holding that the record did not support a finding of a valid arbitration agreement, or that Hill had adequate notice of the arbitration clause. Gateway appealed that decision immediately, which was vacated and remanded. Issue: Whether the customers were bound by the arbitration clause contained in the materials shipped to and accepted by them, regardless of whether that provision was prominently displayed or the customers were aware of its existence? Rule: A contract need not be read to be effective; people who accept take the risk that the unread terms may in retrospect prove unwelcome. The terms inside a box of software bind consumers who use the software after an opportunity to read the terms and to reject them by returning the product.

Holding: Yes; the court stated that a contract did not have to be read in order for it to become effective and that the terms inside a box of software were binding on a consumer who subsequently used it. Thus, they were bound by the arbitration clause. Rationale/Analysis:

Judgment: Trial courts decision was Vacated and Remanded with instructions to compel Hill to submit to arbitration.