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Highlights From Clickwrap 101: What You Need to Know If You Face Litigation

April 23, 2021 5 min read
clickwrap agreement

With the recent addition of PactSafe to the Ironclad team, you’ve probably heard the term “clickwrap” more frequently. While it may not be a term you’re familiar with, we can bet it’s actually a contract you’ve signed more recently than you may think. 

Covering all things clickwrap-related, our team of experts recently hosted a webinar to answer all of your burning clickwrap questions, from definitions and use cases to precedent-setting case law and best practices. 

In case you weren’t able to attend Clickwrap 101: What You Need to Know If You Face Litigation, we’ve got you covered with what you missed below or you can watch the full recording here

What are clickwrap agreements?

Clickwrap agreements are online contracts a signer agrees to on a webpage or mobile application by clicking a button or checking a box to agree to the terms. These agreements are the fastest way to gain acceptance of your company’s terms, but they’re also highly enforceable should a dispute arise because the users’ acceptance data is captured and stored. 

What types of contracts work well as clickwrap agreements?

Many types of contracts can be used as clickwrap agreements, but some of the most common types are: 

  • Terms and Conditions: 58% of 2020 clickwrap litigation cases involved some variation of standard website terms.
  • Employment Agreements: 21% of 2020 clickwrap cases involved contracts relating to employment.
  • Privacy Policies: Clickwrap agreements provide an easy means of complying with data privacy laws. It also creates a better, more-informed user experience for customers. 
  • Membership Agreements: Clickwrap agreements work well with almost any set of standardized terms.

‘Wrap agreement types

In addition to clickwrap, there are two other types of “‘wrap agreements”: browsewrap and sign-in-wrap. Here’s how the three compare to one another: 

1. Clickwrap

clickwrap agreement

  • Users are required to take an affirmative action to manifest assent to legal terms. 
  • Users are required to affirmatively agree to a set of legal terms by checking a box or clicking a button that states “I agree” or some equivalent.
  • User assent to the legal terms is the only purpose of the button or checkbox.

2. Browsewrap

browsewrap agreement

  • Users are notified that use of the website or app subjects them to the legal terms
  • Users are not required to take any action to agree to the legal terms.
  • Users agree to be bound by the legal terms simply by using the website or application, and a link exists somewhere on the screen

3. Sign-in-wrap

sign-in-wrap agreement

  • Users are notified that by taking some secondary action, they are also agreeing to the legal terms
  • Hybrid between clickwrap and browsewrap.
  • Notify the user of the existence of legal terms and advise that by clicking the button to proceed to the next screen, the user is agreeing to the legal terms.
  • User assent to the terms is not the main purpose of the button, but users are required to take action.

However, the biggest takeaway is this: 70% of clickwrap agreements were enforced in 2020, while only 14% of browsewrap and 64% of sign-in-wrap agreements were enforced in the same year.

Case law examples

When learning about clickwrap and other types of digital acceptance agreements, it can be helpful to understand precedent-setting cases in this arena. Here are the ones that stand out: 

Wilson v. Huuuge, Inc: Huuuge tried to rely on a browsewrap agreement to establish user assent to their terms, but users had to scroll through several screen lengths of text before encountering the hyperlink, which wasn’t clickable. Ultimately, the court ruled against Huuuge, Inc., stating that users did not have reasonable notice.

Capriole v. Uber Technologies: Uber required drivers to agree to its terms during the sign-up process via clickwrap. The court found that this design effectively put users on notice of the terms and gave them an opportunity to read the terms prior to agreeing.

Feld v. Postmates: Postmates presented its terms to users during the signup process via sign-in-wrap. Their screen design was clean and uncluttered, with a solid background and clear prompt directing users to read the terms, ultimately leading the court to rule that that the agreement was enforceable. 

Kemenosh v. Uber Technologies: Uber alerted users to its terms via sign-in-wrap during the account registration process. However, users were not required to click the links before completing registration, nor were they encouraged to do so, and the hyperlinks did not resemble traditional hyperlinks. The court ruled that Uber’s agreements were not enforceable. 

Clickwrap best practices

These cases show us that the best way to create enforceable clickwrap agreements is to follow clickwrap best practices and guidelines. Here are our top recommendations: 

Screen design

  • Keep the screen simple and uncluttered.
  • Use contrasting colors for fonts and backgrounds.
  • Use conspicuous font sizes.
  • Make the entire screen visible at once.
  • Do not pre-check the checkbox.
  • Use consistent language.

Documentation

  • Be able to show who accepted which version of the terms.
  • Be able to show what the screen looked like when users encountered the contract acceptance process.

Reasonable notice

  • Alert Users to the existence of the agreement with specifically clear language.

Objective manifestation of assent

  • Require users to check a box to manifest assent to the terms.
  • Require users to agree to terms again after they’ve been modified.

Opportunity to read

  • Embed the terms in a scrollpane directly on the screen.
  • Require users to click the hyperlink to the terms.
  • Advise users to read the terms prior to checking the box or proceeding through the process.
  • Make sure the hyperlink to the terms is clickable (do not require users to manually enter the URL).
  • Hyperlinks should resemble traditional hyperlinks: blue and underlined.

The benefits of third-party clickwrap solutions

Clickwrap solutions are essential to creating reliable and enforceable agreements with your users with their ability to track acceptance, automated record creation, and easily take full control over your updates. To learn more about the benefits of implementing clickwrap for your business, request a demo here

About Ironclad

Ironclad is the #1 contract lifecycle management platform for innovative companies. L’Oréal, Staples, Mastercard, and other leading innovators use Ironclad to collaborate and negotiate on contracts, accelerate contracting while maintaining compliance, and turn contracts into critical carriers of operational business intelligence. It’s the only platform flexible enough to handle every type of contract workflow, whether a sales agreement, an HR agreement or a complex NDA. The company was named one of the 20 Rising Stars on the Forbes 2019 Cloud 100 list, and is backed by leading investors like Accel, Y Combinator, Sequoia, and BOND. For more information, visit www.ironcladapp.com or follow us on LinkedIn and Twitter.

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