Why You Need a Third-Party Vendor for Clickwrap Solutions

As our world becomes increasingly digitized, clickwrap solutions have seen a corresponding explosion in popularity. Unlike traditional ways of signing contracts, clickwrap doesn’t require users to sign or place their signatures on Word or PDF contracts. To indicate assent to the terms of a contract, all users have to do is click a button or check a box to say “I agree.”

Unlike other popular forms of signing contracts, such as browsewrap, clickwrap solutions enjoy a high success rate. Courts often enforce terms that:

  1. Use clear design elements to give users proper notice of your contract.
  2. Give users clickable boxes and buttons to indicate their affirmative assent.
  3. Provide detailed back-end documents to prove that the users agreed to your contract.

It’s particularly important to provide a solid audit trail of documents to prove who signed what and when since courts look at this evidence to determine the enforceability of your clickwrap agreements. If you can’t produce this evidence, you also won’t be able to provide adequate notice of your terms to users, which courts require for your contract to be enforceable. 

Therefore, you need to find an organized and secure way to store and organize these back-end documents. You should use a third-party vendor to host your back-end documents since it will streamline managing them. It’s also a better option from both a legal compliance and security standpoint, and courts tend to favor records produced from a third-party than home-grown solutions.

Read on to learn more about the benefits of having a third-party vendor for clickwrap.

What are the advantages of having a third-party vendor for clickwrap?

A third-party vendor for clickwrap is a company that provides clickwrap management for another company. Third-party vendors can simplify the contract management process by helping you deal with the most complicated parts of the clickwrap back-end document management process.

Here are the advantages of having a third-party vendor for clickwrap:

1. Courts are more likely to trust companies that use third-party vendors for clickwrap

Caselaw has made it clear that courts like it when companies use third-party vendors for clickwrap. Courts are more likely to suspect your records are forged or fraudulent if you maintain records of acceptance in-house.

For example, in Dillon v. BMO Harris Bank, the court refused to enforce BMO Harris Bank’s terms. BMO Harris Bank had tried to argue for arbitration by relying on a clause in one of its online loan agreements. It submitted a declaration outlining its online application process and arguing why the agreements needed arbitration. Still, the court ruled that this evidence didn’t meet the mark.

This was because BMO Harris Bank had exclusive control over their electronic records. As such, they were in a position to create records and documentation to advance their position in court. The court also ruled that even if there was no chance of fraud, there’s still a chance of error when companies produce and maintain their own audit trails for contract compliance. In the court’s own words, a company’s electronic record-keeping system “may include agreements whose terms and electronic click-through procedures vary over time.”

If the BMO Harris team had entrusted their clickwrap procedures and documents to a third-party vendor, the court would’ve probably enforced their agreement. The third-party vendor could’ve helped them manage, create, and produce reliable documentation for contract compliance.

2. Third-party vendors help you standardize your contracts

Hiring a third-party vendor for clickwrap will also help you standardize your contracts. This is because third-party vendors have centralized legal content management systems or legal centers. These centralized hubs help you to stay on top of your contracts and seamlessly track versions, publish new terms, and prove acceptance with just a few clicks of your mouse.

Without a centralized hub to store and manage your contracts, it’s easy to lose track of them. This is a particularly common problem when your terms are scattered all over your website. In such a case, Legal will find it incredibly difficult to determine:

  • Which versions of a certain contract are live on the site. 
  • Which versions of a certain contract need to be updated.

If there are multiple versions of a clickwrap agreement floating around in your organization, Legal will also be responsible for determining which contract version a particular user signed. This can have a lot of implications for enforceability since users could agree to slightly different versions of the same contract.

Fortunately, you can avoid these uncertainties by getting a third-party solution. Most third-party vendors have legal centers that allow them to keep all the terms in one place to make sure that users are all signing the same contract. A legal center will also make it easier to manage updates and keep everyone on the same page about who’s signing what and when. This means you’ll have better and more reliable back-end records of acceptance to prove who actually accepted your contract.

3. Third-party vendors can provide higher quality (and quantity) of evidence for clickwrap

Ever since clickwrap’s explosion in popularity, courts have started to demand more robust audit trails in court. This means it’s more important than ever that you can provide high quality and quantity of evidence to back up your clickwrap agreements. You need to be able to provide clear evidence that users have given actual consent through detailed back-end records that explicitly lay out who agreed to which contract and when.

To keep up with the courts’ increasingly stringent standards, you need to get a third-party solution for clickwrap. If you don’t, you would have to constantly monitor courts’ decisions and update your company’s record-keeping and contracting systems. By delegating these responsibilities to a third-party solution, you’ll have more time to work on projects you can manage on your own.

Third-party solutions will also do a more thorough job catching up to industry standards. Some solutions even come with guardrails to ensure that your clickwrap solutions are compliant with relevant laws. Ironclad, for instance, comes with approval routing and guardrails on clauses to ensure 100% automatic contract compliance.

4. Third-party vendors are more secure than in-house solutions

Third-party vendors also provide more security than in-house solutions.

Ironclad, for instance, has multiple security measures in place to prevent and mitigate data breaches and other security issues. As a SOC 2, Type II compliant business, we do everything to protect our systems and customer data. We have a comprehensive data retention policy to ensure that records that are no longer needed or of value are deleted at regular intervals. Additionally, we encrypt all data in transit and at rest to keep data flowing in and out of our company in an airtight manner. This means that only employees who absolutely need access to customer data are granted access.

While you could try to hire a team of cybersecurity professionals to create a secure IT environment to store and process your clickwrap data, doing so wouldn’t be efficient. Not only will it take you a long time to assemble a suitable team, but it’ll take your team a long time to create a suitable and secure IT environment. Your organization might also be vulnerable to attacks and breaches caused by internal staff, such as unintentional deletion of important data and applications. In contrast, third-party vendors are unlikely to make these errors because their reputations are built on their ability to safeguard their clients’ data.

5. Third-party vendors know best practices to put users on notice

Like other contracts, clickwrap agreements require you to give users notice of the terms they’re giving assent to. If the terms can’t be found, you won’t be able to provide users adequate notice, making your contract unenforceable in court. 

By hiring a third-party vendor, you’ll be able to put users on notice more easily since all of your terms will be in a centralized, easily accessible hub.

Takeaway

As clickwrap workflows become more popular, courts will develop stricter requirements for enforceability. To ensure that your clickwrap terms are enforceable in court, you need to get a third-party vendor for clickwrap solutions. 

A premier third-party solution like Ironclad will give you everything you need to ensure your clickwrap contracts meet the mark. Specifically, a third-party vendor will make courts more likely to trust your clickwrap records, help you standardize your contracts, and provide high-quality and high-quantity clickwrap evidence. Third-party vendors are also more secure than in-house security solutions and can give your users better notice of the terms they’re giving assent to.

Interested? Try the Ironclad demo today. Our demo will show you how Ironclad can boost business agility by cutting your clickwrap contract processing time by 80%. Our third-party solution takes the friction out of every part of the terms management process, so you have more time to focus on high-value issues that boost your Return on Investment.

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