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Introduction to Clickwrap Agreements

April 27, 2021 6 min read
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Clickwrap agreements have become essential to online businesses, as they are the fastest way to digitally collect acceptance to your organization’s terms and conditions. If done properly, clickwrap is also one of the best ways to ensure an enforceable, auditable trail of acceptances for your online agreements. Businesses everywhere are harnessing the power of these standardized, digitally-native agreements to collect acceptance from users without disrupting the customer experience. 

This has become especially important during the pandemic, when people are increasingly buying online to avoid purchasing in person. But while most consumers are by now familiar with checking a box to agree to terms and conditions, many companies don’t know how to make sure their clickwrap agreements are enforceable. Here is everything you need to know about clickwrap agreements:

What is a clickwrap agreement?

A clickwrap (also known as click-accept, click-to-sign, or clickthrough) agreement is an online agreement that users agree to by clicking a button or checking a box that says “I agree.” Related agreement types include sign-in-wraps (where clicking “register” or “sign-in” constitutes acceptance to the terms) or browsewraps (where using the site indicates acceptance of terms). 

clickwrap agreement

Clickwrap

Browsewrap

sign-in-wrap

Sign-in-wrap

Because clickwrap agreements require users to affirmatively assent to a contract by checking a box or clicking a button, a clickwrap is the most commonly enforced type of online agreement. Unlike clickwrap, sign-in-wrap and browsewrap agreements are “accepted” when the user performs another action: sign-in, register, or login (sign-in-wrap) or just using the website (browsewrap). 

Compared to sign-in-wrap and browsewrap, clickwrap agreements have maintained the highest success rate in court. In 2020, clickwrap agreements had a 70% success rate, compared to 64% for sign-in-wrap, and 14% for browsewrap agreements. The success rates of all three have declined over the years as the courts have become more sophisticated in their assessment of these agreements and in the evidentiary support required to enforce them. 

Is clickwrap legally enforceable?

When tracked and managed properly, clickwrap agreements are legally enforceable. Both the Uniform Electronic Transactions Act (UETA) and Electronic Signatures in Global and National Commerce Act (ESIGN) recognize the validity of clickwrap and other digital agreements.

The courts often determine whether the agreements is enforceable by judging

  • Whether or not the user explicitly accepted the contract
  • Whether the user had actual or inquiry notice of the terms
  • The design and layout of the screen containing the clickthrough agreement

Businesses that are able to provide evidence to show the above are more likely to have their terms enforced. The common types of evidence used to enforce clickwrap (and sign-in-wrap and browsewrap) agreements in court are: affidavits/declarations, screenshots, and back-end records of acceptance. 

Screenshots

A screenshot is an image that displays what a screen looked like at the time of sign-up or check-out. Courts often rule in favor of terms on a page designed to provide actual or inquiry notice to a user. As a result, if the screen design is poor, the screenshot tends to sway the court towards not enforcing the terms. On the other hand, if the screenshot shows that the screen is optimally designed, the court is highly likely to rule in favor of enforcing the terms. 

Affidavit/Declaration from key personnel

Affidavits or declarations are written statements or sworn testimony from key personnel familiar with the contract acceptance process. A declaration is more likely to be successful when the person providing it has pertinent knowledge of the system being described and/or is in a role that familiarizes them with the contract acceptance process. 

Back-end records of acceptance

Back-end records are records that contain data captured at the time of contract acceptance. This data indicates who accepted an agreement, when the agreement was accepted, and what version of the agreement that was live at the time of acceptance. When used as evidence to try to compel arbitration, back-end records are most successful when they showcase specificity and a high level of detail—that is, that a particular user signed a particular agreement at a particular time.

Key clickwrap case law

Clickwrap litigation has been ongoing for different types of companies since 2002. Earlier clickwrap cases have defined the landscape of clickwrap agreements and how the courts assess them today.

Specht v. Netscape: Dating back to 2002, this case is seen as the “original” clickwrap case. On the web page users visited to download software, Netscape included language “Please review and agree to the terms” at the bottom of the screen, but users weren’t required to agree to the terms in any other way. The court determined that a customer clicking a button didn’t necessarily indicate an agreement to terms if the customer wasn’t aware of the existence of those terms, and did not enforce Netscape’s terms.

Sgouros v. TransUnion Corp: TransUnion encompassed their terms in a scroll wrap directly on the screen, and required users to check a box labeled “I Accept & Continue” when creating an account. The court acknowledged there was a consensus that clicking a button or checking a box is sufficient to signify acceptance of a contract, as long as the layout of the page put the users on notice of the terms. But since the notice surrounding the checkbox did not notify users of the existence of a contract, the court did not enforce TransUnion’s terms.

Nguyen v. Barnes and Noble, Inc: Barnes & Noble included a link to the terms on the bottom left corner of every page on their site. If a user clicked on the hyperlink to the terms, they would see the language at the very top of the terms that by visiting or doing anything on the Barnes and Noble site, they have accepted the Terms of Use. Unfortunately, Barnes & Noble included the link at the bottom of each webpage and did not otherwise call the terms out to the user or require them to take an action to explicitly assent to the terms. So, the court found that users were not put on reasonable notice.

These cases highlight the significance of putting users on notice of the existence of terms and capturing their affirmative assent to the terms. When ignored, the courts aren’t likely to enforce the terms. These cases have also informed clickwrap best practices to ensure your terms’ enforceability in court.

What are clickwrap best practices?

Here are some overall best practices for clickwrap enforceability:

Screen design

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

Reasonable notice

  • Alert users to the existence of the agreement with specific and clear language.

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.

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.

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.

Benefits of clickwrap

Clickwrap agreements are often deployed to handle some of the most important agreements a business has: from terms of service hosted online within a site or app to high volume employee agreements. A clickwrap can be embedded on your website, presented via dedicated URL, or delivered by text and instant messages. 

They are perfect for all agreement types, and are perfectly suited for improving business function and achieving departmental goals. The nature of these agreements demands a higher level of both scrutiny and security, making it imperative that businesses have a handle on not only how agreements are presented and accepted, but how to prove acceptance.

 

Conclusion

Innovative businesses are taking advantage of clickwrap agreements. Used in registration, login, and check-out flows, clickwrap agreements allow for minimal disruption of the user flow while checking the proverbial legal box.Clickwrap agreements are legally enforceable – afforded by provisions in UETA and ESIGN Act – as long as they are managed and tracked properly.  Understanding the trends in clickwrap litigation and following best practices can go a long way in helping businesses enforce their agreements in court.

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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