Are Sign-In-Wrap Agreements Enforceable?

Imagine a judge asked you to produce records that proved who signed your online legal agreements, and when: would you be able to? Would your sign-in-wrap agreement hold up in court? These are crucial questions that every company needs to ask itself, as the likelihood of online agreement litigation skyrockets every year. While some may know about clickwrap and browsewrap agreements, very few know of the hybrid online agreement type known as sign-in-wrap. This blog outlines case law around these agreements as well as success and loss factors in enforceability.

Sign-in-wrap agreements notify the user of the existence of the contract and advise the user that by clicking the button to proceed to the next screen. However, sign-in-wrap agreements do not require the user to affirmatively agree to a contract by clicking a button or checkbox. 

In Ironclad’s Clickwrap Litigation Trends report, we found that because users are advised that clicking a button to proceed to the next screen indicates their assent to the contract—rather than affirmatively clicking a button to manifest assent—the enforceability of sign-in-wrap agreements is less certain than that of clickwrap agreements.

In Cullinane v. Uber, the court declined to find Uber’s sign-in-wrap valid because the design and content of the screen did not render the sign-in-wrap agreement conspicuous enough to indicate to users that they were entering into a contract. On the other hand, the court in Plazza v. Airbnb held Airbnb’s sign-in-wrap agreement valid, reasoning that the agreement tended to provide the user with notice of the online agreement because the user was still required to click a button, even if manifesting assent was not the primary purpose of that button.

Though enforceability of sign-in-wraps is less certain, we’ve found that many courts enforce sign-in-wrap agreements under circumstances in which the language and layout of the webpage emphasizes the user’s opportunity to access the contract and reasonably gives the user notice of the contract’s existence. For example, in Meyer v. Uber, the court found that the design and layout of Uber’s registration screen, as well as the language used in the sign-in-wrap agreement, provided the user with reasonable notice that the user was agreeing to Uber’s terms by clicking the “Register” button.

On the other hand, the court in Nicosia v. Amazon found Amazon’s sign-in-wrap agreement invalid, as the layout of the screen provided users with insufficient notice of the agreement. Specifically, Amazon placed the agreement language at the top of the webpage and the “Place your order button” at the bottom, the agreement language was not particularly conspicuous, and nothing about the “Place your order” button indicated to the user that they were doing anything other than placing an order.

Our study found that the enforceability of the sign-in-wrap agreement often depends on the judge, court, or jurisdiction. For example, Uber’s user registration screen includes a sign-in-wrap, which alerts users that, “By creating an Uber account, you agree to the Terms of Service and Privacy policy.” Though the Second Circuit found the layout of the screen sufficient to form a valid contract, the First Circuit disagreed and found the sign-in wrap invalid.

Amazon, too, has run into this problem. Amazon’s website includes a sign-in-wrap agreement that states, “By placing your order, you agree to Amazon.com’s privacy notice and conditions of use.” Though the Southern District of California found the sign-in-wrap valid, the Second Circuit came to the opposite conclusion and held that the agreement was invalid.

According to our study, the validity of sign-in-wraps are generally less likely to be upheld by courts, compared to clickwrap agreements. This is because courts have a harder time determining that a user affirmatively manifested assent to the agreement when the primary purpose of the button the user clicked was not acceptance of the website’s terms, but rather performance of a completely separate action (i.e., signing in, signing up, logging in, or registering). As a result, the enforceability of sign-in-wrap agreements depends on the design and layout of the webpage, as well as the language that indicates that the user is entering into an agreement.

Sign-in-wrap agreements utilize a “dual purpose” button. This means the user clicks a button to perform a specified task (such as logging in, signing up, registering, or signing in) and is notified that by clicking the button to perform that task, the user is also agreeing to the Terms.

In these cases, the primary purpose of the button is the performance of the task, not user assent to the contract. Instead, user assent is a secondary purpose of the button.  Our litigation trends report shows that courts are less inclined to find that clicking a dual purpose button creates a valid contract because user assent to the contract is not the primary purpose of the button. In these cases, courts look to the design and layout of the screen to decide whether the user was afforded sufficient notice of the contract’s existence.

All in all, sign-in-wrap agreements have a pretty healthy success rate in courts. While it is a marked improvement from browsewrap agreements (which require no affirmative assent from the user whatsoever), it is no match for a clickwrap agreement. Learn more about the differences between the types of online agreements in our Clickwrap Litigation Trends report.