What Is a Clickwrap Agreement?
Definition: What is a clickwrap agreement?
A “clickwrap agreement” is a form of electronic signature, where the act of signing via an electronic signature is replaced with the act of clicking to check a box or on a button that includes acceptance language (such as “I Agree” or “Accept”).
Clickwrap agreements are the best way for businesses to limit their risk without impacting conversion or customer experience. Companies add clickwrap agreements to sign up pages, checkout flows, and login pages.
What makes clickwrap agreements different from an eSignature option is the electronic, “signature” (that barely legible, squiggly line you draw with your mouse or finger) that is placed on a document to memorialize your signature. A clickwrap agreement eSignature is a collection of key data points that comprise an audit trail, confirming that a user “actively assented” to an agreement through an action, such as clicking a button.
Clickwrap agreements are much more prevalent in B2C businesses where companies are selling products and services exclusively online, but have become a much more prevalent, legally binding way to enter into a contract with another party.
Is clickwrap legally enforceable?
Yes, clickwrap agreements (provided they are designed, presented, and tracked in compliance with best practices) are just as enforceable as both traditional wet ink signatures and electronic signatures in the US.
There are a few key pieces of legislation that specifically outline the regulation of clickwrap agreements.
Electronic Signatures Act (ESIGN)
The federal Electronic Signatures in Global and National Commerce Act (ESIGN) was enacted on June 30, 2000. The law was intended to facilitate the use of electronic signatures and other electronic records as they pertained to interstate and foreign business transitions. ESIGN laid out several requirements, or standards, used to determine the validity and legal enforceability of electronic agreements in these circumstances.
The Uniform Electronic Transactions Act (UETA)
The Uniform Electronic Transactions Act (UETA) was adopted by the National Conference on Uniform State Laws in 1999 and has since been adopted by 47 states. UETA predates ESIGN, but both lay out requirements for electronic signatures and electronic records to be afforded the same treatment as that of their paper counterparts – UETA at the state level, and ESIGN at the federal level.
How does clickwrap comply with federal law?
Clicking a button or checking a box in order to indicate your assent fulfills the requirement that “intent to sign” is demonstrated by the signer.
In other words: since the signer has to actively click a button that clearly informs them they are agreeing, they are showing they intended to sign.
Clickwrap is an accepted form of electronic signature: a binding, legally recognized form of contracting. In fact, UETA commentary expressly states that the definition of an electronic signature includes “the standard webpage click through process.”
Both of these Acts lay out specific guidelines for electronic compliance.
Different ways to present clickwrap agreements
There are many different ways to present your clickwrap agreement, all of which can influence your conversion rate and the likelihood of your agreement being upheld in court, should the need arise.
Some companies such as banking sites or apps, embed the agreement they are asking you to sign on the page itself, forcing you to scroll through the agreement prior to accepting, to ensure the signer can not dispute being presented the terms to which they agreed.
Other companies will require you to offer affirmative assent (check a box, or leave initials) at multiple points in the contract to call attention to certain clauses and affirm assent to them individually, as well as assent to the entire agreement. This is popular in leasing agreements, to call attention to special addendums or community requirements.
Still others, like most social networking sites or apps, will present multiple agreements that are accepted simultaneously through one, singular action of assent (like creating an account, or checking a box). These popular checkboxes generally have links to the agreement referenced, which hosted on another page entirely. In order to support this, companies will often leverage their own web CMS, but that can present its own issues and challenges. Common web CMS solutions are not typically conducive to legal content workflows, and that means best practices are unlikely to be followed. Management of terms specific to locales, different environments within your company, and even versioning of terms can prove to be difficult tasks if you are using a common web CMS for your legal content.
The history of clickwrap agreements
Clickwrap agreements got their name from “shrink-wrap agreements”, agreements that were typically printed on the packaging of software or products that were visible through the cellophane shrink-wrap, which noted by breaking the shrink-wrap you were officially bound to those terms.
That same concept is the basis for clickwrap agreements: a binding agreement, that applies to a good/service accessed via a singular action – in this case clicking a button instead of literally tearing back the shrink-wrap from your sweet, seven disc Microsoft Office software.
The case that is widely considered to have produced our modern understanding of clickwrap and best practice is Specht v. Netscape in 2002.
How to design a clickwrap that checks all the best practice boxes
Case law, in addition to existing legislation, lays out best practice for clickwrap agreement design and presentation. Here are a few high level tips from our in house legal team:
- Provide clear, conspicuous presentation of all relevant legal agreements during the transaction with your intended signer(s).
- Make sure the user is provided clear and obvious notice that the acceptance of any relevant agreement is required.
- Include steps that require active assent, such as checking a box, to show obvious intent to sign.
- Give the user the opportunity to review the agreements accessibly prior to agreeing.
- Track the version accepted by your user, and have a way to demonstrate how the version of terms was presented, and what versions were in place on any given date.
Will different designs for clickwrap agreements affect my conversion rate?
The way you present a contract can impact your conversion rate: it can either expedite signing or provide the customer with an obvious excuse to use as an offramp, resulting in buyer drop-off.
Making your agreement accessible, easy to interact with, and easy to sign can only help increase your conversion rate. Clickwrap can allow you to limit the amount of required actions taken by the signer, while retaining enforceability, and can be presented in self-service flows, enabling signing to occur whenever and wherever the buyer is ready to transact.
Are clickwrap agreements better than electronic signatures?
From a user experience, workflow enablement, general efficiency perspective…very much so. Clickwrap agreements allow you more flexibility in agreement presentation, automated acceptance tracking, and enables self-service workflows.
In terms of legal enforceability, clickwrap agreements provide an added layer of authenticity with the data points and audit trail that are collected throughout the process of acceptance.
Can I use clickwrap for my agreements?
Lots of agreements can be delivered as a clickwrap agreement. However, there are certain agreements types that benefit the most from clickwrap treatment.
We think about contracts being signed through clickwrap agreements or electronic signature in two ways: Standardized and Personalized contracts.
Standardized contracts generally have the same language from person to person and can be accepted repeatedly, at high volume, by many or even infinite signers. Think of agreements such as NDAs or Terms and Conditions, which broadly apply to the signer whoever they may be.
Personalized contracts are agreements that are typically processed in lower volume because they are tailored to designated signers, and not meant to be re-used without being tailored, again, to a new, unique signer. These are agreements such as M&A activity, long-term partnership agreements, etc.
Typically, the most tangible ROI from clickwrap is seen in Standardized contracting. Standardized contracts are ripe for automation can be hosted online and shared because they do not need to be individually reviewed or altered prior to being accepted. Companies implement clickwrap agreements as a part of other workflows like customer onboarding, ecommerce checkout, partner onboarding, and more.
Table of contents
- Definition: What is a clickwrap agreement?
- Is clickwrap legally enforceable?
- How does clickwrap comply with federal law?
- Different ways to present clickwrap agreements
- The history of clickwrap agreements
- How to design a clickwrap that checks all the best practice boxes
- Will different designs for clickwrap agreements affect my conversion rate?
- Are clickwrap agreements better than electronic signatures?
- Can I use clickwrap for my agreements?