Hill v. Gateway 2000, Inc.

Rich and Enza Hill ordered a Gateway 2000 computer by telephone. The computer arrived in a box containing the hardware along with a list of terms, including an arbitration clause, which stated that the buyer would be deemed to have accepted all terms by keeping the computer for more than 30 days. The Hills kept the computer for more than 30 days before complaining about its performance and filing a class action lawsuit. Gateway moved to compel arbitration based on the terms included in the box.

Judge Easterbrook applied the same framework established in ProCD: in transactions where terms are proposed after the initial purchase, the buyer accepts by performing the act that the seller designates as acceptance. Here, the terms clearly stated that keeping the computer for more than 30 days would constitute acceptance. The Hills had a meaningful opportunity to review all terms and return the computer for a full refund within the specified period. The court rejected the argument that a contract was fully formed at the time of the telephone order, reasoning that practical reality requires flexibility in when and how contract terms are communicated. A telephone order cannot practically convey all terms, and requiring oral recitation of all terms during a phone call would be impractical and would not serve buyers' interests.

Hill v. Gateway 2000 extended ProCD's rolling contract theory to physical goods purchased by telephone and solidified the enforceability of terms enclosed with products. The case has been highly influential in shaping how companies present terms of sale, warranty, arbitration, and dispute resolution provisions to consumers. It is widely cited in cases involving online purchases, subscription services, and other modern consumer transactions. Critics argue the case gives sellers too much power to impose terms on consumers, while supporters argue it reflects the practical realities of modern commerce.