What Is a Clickwrap Agreement?

Clickwrap is an online agreement between a user and a company that requires the user to click a box or a button before they download content, make a purchase, or use a website. The box or button confirms that the user agrees to an online contract with the company, and substitutes for the user's signature.

In a clickwrap agreement, in order to use a website or download content, the user has to check a box saying they've read and agree to the terms and conditions that apply to the website or software. Sometimes the agreements are many pages long and difficult to read. They usually contain two things:

  • A checkbox or button
  • A notice telling you that you agree to the terms if you click the box

Clickwrap agreements are also called:

  • Clickthrough agreements
  • Clickwrap licenses

Types of clickwrap (and browsewrap) include:

  • Terms and conditions
  • Terms of use
  • Privacy policies
  • End user license agreements (EULAs)

Buttons that signify clickwrap agreements include:

  • I agree
  • OK
  • I consent
  • I accept

You can cancel a clickwrap agreement by clicking "cancel" or closing the window instead of accepting.

You usually see clickwrap agreements when you want to:

  • Create a user account on a website
  • Log in to an online bank account
  • Download content
  • Finish a transaction online

The clickwrap agreement is a substitute for a wet signature.

A shrinkwrap license is where the idea of a clickwrap agreement came from. Shrinkwrap license is a software industry term that means if you open the packaging on software, then you agree to the software company's terms and conditions.

Sample Forms

Terms of Use Template

Privacy Policy Template

Clickwrap vs. Browsewrap

Browsewrap and clickwrap are both digital contracts inspired by the shrinkwrap license. Browsewrap links to the legal agreement on:

  • Websites
  • Mobile apps
  • Software apps

You can find browsewrap in the bottom menu of a web page, usually listed as Privacy Policy or Terms of Service. Browsewrap usually:

  • Gives you a link to the full terms
  • States that if you continue to use a website, app, software, etc., then you are agreeing to those terms
  • Encourages you to click and accept the terms (but doesn't keep you from using the service if you don't)

The Zappos.com case, decided in the Nevada District court, distinguished between browsewrap and clickwrap.

  • Zappos was using browsewrap that was hidden in small text at the bottom of its site page
  • The Zappos hyperlink was hard to find, so it wasn't obvious to users where to find the terms if they wanted to look at them
  • The case helped set precedents for how businesses should make browsewrap and clickwrap agreements that actually work as contracts

Clickwrap increases the chance that your users see and agree to the contract.

A clickwrap and browsewrap hybrid is a popular choice for sites like Facebook and eBay. You have to click a pop-up window to log in to their websites. The window doesn't contain the agreement text (like true clickwrap does), but instead has hyperlinks to the agreements.

Why Is a Clickwrap Agreement Important?

Clickwrap agreements add convenience for companies in lots of ways:

  • Speedy and easy customer agreement
  • Not just for software programs but for other kinds of agreements, too
  • Simple, encrypted digital contract records
  • Automatic downloading of any contract revisions
  • e-Signature law and court case compliant
  • Clickwrap web forms embedded directly into websites

With clickwrap agreements companies can:

  • Have lots of customers sign the same contract without discussing contract terms with any one customer
  • Save an electronic signature
  • Include terms and conditions that aren't covered by the law

Legal Terms

Clickwrap agreements usually contain:

  • Class-action waivers
  • Where any lawsuits would take place
  • Requirements for using mediation or arbitration to resolve problems
  • A maximum amount that a user can claim as damages

ADP v. Lynch

Clickwrap agreements don't have to happen between companies and third parties. Some clickwrap agreements happen between employers and employees.

  • ADP sued former employees for taking jobs with competitors
  • ADP argued that the former employees breached contracts they agreed to when they accepted stock option grants
  • The employee argument was that they didn't have good enough notice of the terms
  • The employees could not accept the grants without clicking a box that said they read the documents
  • The court ruled in favor of ADP's clickwrap being enforceable
  • Take note: Even though the language around the box didn't specifically state clicking meant agreeing, in this case the court said there was no difference

Why Use a Clickwrap Agreement?

The law doesn't specify if you should use clickwrap or browsewrap. Lots of businesses prefer clickwrap, however, because of the legal terms around contracts.

To make a contract enforceable:

  • The user needs to have notice
  • The user needs to give consent
  • Enforcing the contract has to be fair

Notice

The parties agreeing to the contract need to know if the policy changes. You at least need to give users the opportunity to look at any contract changes, so it's on them if they choose not to look.

  • Pinterest lets all users know when they update their clickwrap even if you're not logged in
  • Airbnb gives you new terms when you open the app, and you have to agree to the update if you want to use it
  • Pingdom makes you click in agreement to their policy before you can get a free trial

Consent

Sometimes people call consent meeting of the minds. Consent can either be:

  • Express - clearly stated, either verbally or nonverbally
  • Implied - concluded based on someone's actions

Express consent is much easier to prove in court, and express consent is what you're getting when you use clickwrap over browsewrap.

Fair

The idea of fairness means:

  • Enforcing the contract can't be unconscionable, which means nobody well-informed would actually consent to the contract
  • One party of the contract can't have significantly more options than the other party

Clickwrap Best Practices

Make sure your clickwrap is enforceable under U.S. law by:

  • Displaying the agreement in a clear way before letting people access your site, app, or software
  • Make them agree to the terms before giving them the chance to register or create an account
  • Have customers agree to terms before making a purchase
  • Remove any questions about whether someone is agreeing or disagreeing to the agreement
  • Tell people that agreeing to the terms creates a legal contract
  • Put up a dialog box if people try to use your site without clicking to agree to the terms, notifying them they can't continue
  • Don't call your contracts clickwrap or browsewrap

If you'd rather use browsewrap:

  • Display your terms and your privacy policy in an obvious place on your website
  • Do not put the terms on a page that isn't the front page
  • Make the links stand out, by using font changes or different colors
  • Give users notice to the agreement if they decide to make an account on your website, including a clickwrap check box
  • Make users agree to the terms before making a purchase on your site
  • Use clear language that states continuing to use the website means agreeing to the terms
  • Always notify your users if you change your agreements and policies

Clickwrap Enforced

The law requires companies to have privacy policies, but not terms and conditions or other contracts. Most countries' privacy policy laws say the policies have to be easy to get to.

Privacy Policy law examples:

Clickwrap is a contract that both sides have to comply with by law. How you write your clickwrap agreement is important in case a user has a problem later.

  • You need to give notice about any and all terms the user is agreeing to
  • It needs to be clear and unambiguous
  • The user needs to be able to agree (like by clicking the button)

SaaS (Software as a Service) apps need privacy policies or terms and conditions because:

  • They collect private details about users
  • They need to lay out clear terms about how users can use and not take advantage of app features

Companies, universities, and other entities have to create standards around accepting clickwrap agreements when they want to use software and websites. North Carolina State University has a clickwrap policy that serves as an example.

  • Only someone who's allowed to enter the university into a contract can accept a clickwrap agreement on behalf of the university
  • Software licensing management reviews clickwrap agreements to make sure they don't go against North Carolina law
  • The university reviewed lots of common clickwrap agreements to create lists of approved and denied agreements
  • The university cautions students and other users to make sure to check the list before accepting clickwrap on a university computer
  • The university doesn't offer support for outside programs, even with approved clickwrap
  • NC State offers a submission form for unlisted clickwrap

Clickwrap and Copyright Transfer

Section 204(a) of copyright law says you can't transfer copyright unless the copyright's owner signs a written document that hands over the rights to another party. Clickwrap can transfer copyright from one person to another, thanks in part to the E-Sign Act.

  • You want to upload a photograph to a website
  • The website has a clickwrap agreement before you can upload
  • In the agreement, it says when you upload the photograph, you transfer your copyright to the website
  • If you click Yes or I Agree and upload your photo, then you have agreed to transfer your copyright

The writing requirement of Section 204(a):

  • Protects people against oral agreements (or others claiming there was an oral agreement when there wasn't)
  • Makes it clear who owns the copyright so the rights of the copyright transfer
  • Doesn't have to be complicated; it can be one clear line of writing with a signature underneath

What kind of copyrights transfer:

  • Assignment
  • Mortgage
  • Executive license
  • Pledge

An email exchange with no signatures does not satisfy Section 204(a). The E-Sign Act is the key in this equation. It states:

  • A signature isn't invalid because it's in electronic form
  • You can't say a contract isn't valid because it has an e-signature on it

An electronic signature is an electronic

  • Sound
  • Symbol
  • Process

Metropolitan Regional Information Systems v. American Home Realty Network

The MRIS v. AHRN case dealt with this exact issue when MRIS argued it had copyright of photos AHRN uploaded to its site.

  • MRIS argued that AHRN clicking the agree box was the same as an e-signature
  • The court ruled it was an intent to e-sign instead of an actual e-signature, but that the intent was valid in the case of the copyright transfer
  • The court also ruled that the E-Sign Act applied to Section 204(a)

A Craigslist case from 2012 argued the same thing: that Craigslist owned the copyright to user material because the users accepted clickwrap. The court focused more on the written agreement than the signatures in this case. The court ruled in favor of Craigslist.

Some people might questions whether clicking a box constitutes signing a written agreement to give up copyright. These cases, however, set the precedent that it does.

Lawsuits Upholding Clickwrap and Browsewrap

These lawsuits uphold clickwrap and browsewrap practices, as long as it's clear the user is agreeing to contract terms when they click.

Forrest v. Verizon

  • A Verizon customer sued the telecommunications company over a clause in their agreement
  • The customer said Verizon hadn't told them about this clause
  • Verizon had a clickwrap agreement that the user had to click to use the service
  • The customer also argued that the click box was small and that the 13 pages of terms were hard to read
  • Verizon won the case because the user had notice about the agreement
  • The court ruled that users who click the box agree to the contract even if they don't read it

Nicosia v. Amazon

  • The court upheld Amazon's terms that you agree by placing your order
  • Amazon's agreement also said it could change the terms at any time. In the past the court has ruled against terms like that, but in this case, it did not

Fteja v. Facebook

  • Facebook linked to its browsewrap agreement during the sign-up process
  • The notice contained language that stated by signing up, users agreed to the terms that were being linked
  • The court upheld this version of browsewrap as enforceable

Swift v. Zynga Game Network

  • A hyperlink to terms and conditions sat below an Accept button
  • The page said that clicking Accept indicated the user agreed to the terms

DeJohn v. The .TV Corp

  • The terms of .TV's contract were not easy to find
  • The court ruled that users still had notice about the contract, so the contract was enforceable

Motise v. America Online

  • An AOL customer's stepson used the product
  • The court ruled that the stepson was under a sublicense
  • By using the product, the stepson was still bound by the contract

Hubbert v. Dell

  • Dell displayed a message about sales being subject to its terms many times to users with an included link
  • The court ruled that Dell's presentation of browsewrap gave the customers notice about the terms

Cairo v. CrossMedia Services

  • Someone used the CrossMedia Services site multiple times
  • Because the user returned to the website several times, the court ruled that they had enough exposure to gain knowledge of the website, including the terms

Zaltz v. Jdate

  • The user brought a lawsuit against Jdate in New York, and Jdate wanted to move the case to California as it stated in its agreement
  • The user stated they never agreed to that
  • The court ruled that because the user had clicked a box with a link to the terms displayed, the user had agreed (even if she couldn't remember those terms)

I.Lan Systems v. Netscout Service Level

  • I.Lan bought software from Netscout, and the agreement didn't show up on Netscout's website until after I.Lan's purchase
  • The agreement, however, was in the software - and I.Lan had to click a box to use the software
  • The court ruled that clicking the box in the software counted as agreeing to the contract

Scherillo v. Dun & Bradstreet

  • Scherillo argued that he didn't mean to click the Yes box in the clickwrap
  • The court ruled that the terms were communicated well enough that someone could reasonably click yes or no, so the agreement was enforceable

Capsi v. Microsoft

  • Capsi argued that Microsoft's terms were unconscionable
  • The court ruled that the contract didn't have fraud or inequality in bargaining power, so they upheld it

Century 21 v. Rogers Communications

  • A Canadian lawsuit in which Century 21 sued Zoocasa, a search engine, for copyright and contract violations
  • Century 21 argued that Zoocasa was using Century 21 information to make money
  • Canadian contract law requires that the user know about and agree (in some way) to the contract
  • The court ruled that Zoocasa agreed to the browsewrap on Century 21's site
  • This case cited lots of U.S. law, showing that the U.S. is a leader in this type of contract law

Lawsuits Ruling Against Clickwrap and Browsewrap

You can see in cases where the court rules against clickwrap or browsewrap that the language notifying people they're agreeing to a contract is the important factor.

Specht v. Netscape

  • A Netscape user missed a browsewrap agreement because it was on a different page from downloadable products
  • The user got sued for federal violations because of how they used the software
  • The user argued they never saw the agreement
  • The court ruled that the browsewrap agreement couldn't be enforced against that user because they didn't know about the agreement
  • The court also said that an online contract needs manifestation of mutual assent

Holdbrook Pediatric Dental v. Pro Computer Service

  • A contract between the two parties was sent electronically and contained a hyperlink to terms and conditions
  • The person signing the contract printed out a copy to sign and didn't print the terms and conditions
  • Because the contract was wet signed in hard copy, the court ruled that the hyperlink didn't count toward the contract
  • The terms and conditions page had its own signature spot, which indicated they needed to agree separately
  • The contract didn't contain any language pointing to the terms and conditions. For it to be similar to other browsewrap cases, language that stated an agreement to those additional terms needed to be included, and it wasn't
  • This meant the people signing the document didn't have notice about the extra conditions

Ticketmaster v. Tickets.com

  • Tickets.com took info from the Ticketmaster website and posted it without changing much of it
  • Ticketmaster's site had a clause in its agreement that said you can't use information from its site commercially
  • The agreement was browsewrap
  • The court ruled that the browsewrap's formatting wasn't clear enough to prove that Tickets.com had consented to the contract

Comb v. PayPal

  • PayPal offered an ambiguous browsewrap agreement that was more than 20 pages long
  • The court decided that some of the clauses were unethical

Schnabel v. Trilegiant

  • The court ruled that terms emailed after the fact were not enforceable

Sgouros v. TransUnion

  • TransUnion's link to its terms was clearly visible, but without being clear what clicking the button meant
  • Court ruled it didn't provide notice that clicking the button actually meant you were agreeing to the terms

Savetsky v. Pre-Paid Legal Services

  • The court ruled that the button on Pre-Paid Legal Services to buy services didn't let users know they were agreeing to a contract

Knutson v. Sirius XM

  • Knutson bought a car that came equipped with Sirius XM
  • Sirius sent Knutson some documents in the mail, which contained the terms and conditions
  • Sirius tried to argue that Knutson agreed to the terms and conditions by not canceling the radio subscription
  • The court ruled that Knutson didn't buy directly from Sirius XM, and didn't know about any contract

Seek Legal Counsel

Your clickwrap agreement is an important part of your website or software. Find an experienced cyber contract lawyer in your area to answer questions or help draft your online contract. Post your legal need here to get free custom quotes from legal professionals to provide you with an experienced and qualified attorney.