Sooner or later, you will be sued. Because it is inevitable, the question of "when" is less important than whether or not you are prepared for your terms to be enforced. Are you certain that your online legal agreements--clickwrap, sign-in-wrap, and browsewrap--can hold up in court? In our 3-post series, we will detail the three common types of online agreements, case law examples, and the factors that influence their enforceability in court. Our first post is dedicated to clickwrap agreements.
In PactSafe's 2019 study, Clickthrough Litigation Trends, we found that judges often rule in favor of enforcing online agreements when the design and layout of the screen conspicuously provides the user with reasonable notice of the agreement, and the business can show that the user manifested assent. Likewise, courts mostly rule against cases where the business cannot prove that the user affirmatively manifested assent to the online legal agreement, and the screen is cluttered with the contractual language hidden. The presence or absence of these factors indicate which type of online agreement the website utilized and whether the agreement will be enforceable. This varies based on the type of online agreement: clickwrap, sign-in-wrap, or browsewrap.
Online Agreements: Clickwrap
What is a clickwrap agreement?
A clickwrap agreement requires the user to affirmatively agree to the contract by clicking a button or checkbox that states, “I agree.” Websites that utilize clickwrap agreements present the contract terms to the user in various ways. For example, some websites include the contract in a scrollpane, which the user can scroll through to read the contract prior to clicking “I agree.” Other websites include a hyperlink to the contract in the agreement language located next to the button or checkbox, which takes the user to a separate page that contains the contract.
Image of sample clickwrap agreement.
Are clickwrap agreements valid?
Our study found that courts routinely uphold clickwrap agreements as valid contracts because the user affirmatively manifests assent to the contract when clicking “I agree.”
For example, the court in Zaltz v. JDate found that JDate users had manifested assent to JDate’s terms when, as a required part of the registration process, the users checked a box next to the statement “I confirm that I have read and agreed to the Terms and Conditions of Service,” which contained a hyperlink over the words “Terms and Conditions of Service.”
However, our study found that courts are more skeptical of—and scrutinize more closely—clickwrap agreements that do not require the user to review the terms of the contract before clicking the button or checkbox to accept (i.e., the terms are embedded in a hyperlink).
Still, most courts find such online agreements enforceable as long as the user is given an opportunity to review the terms, and the layout and language of the agreement puts the user on inquiry notice of the terms. For example, the court in Applebaum v. Lyft found that Lyft’s clickwrap agreement failed to provide sufficient notice of the contract because the hyperlinked terms on Lyft’s screen were in a small font and colored light blue on a white background. This rendered the terms inconspicuous compared to the rest of the words on the screen, and therefore invalid.
On the other hand, the court in Swift v. Zynga Game Network held that Zynga Game Network provided sufficient notice and opportunity for users to review the contract terms when it prominently placed the hyperlink to the terms directly above the “accept” button. As a result, their online agreement was deemed valid.
Notably, many courts explicitly state that a user’s failure to review the contract terms prior to acceptance does not invalidate the online contract or constitute a valid defense to the user’s breach of that contract.
Generally speaking, we’ve found that courts typically uphold clickwrap agreements because they require the user to affirmatively manifest assent to the online agreement by clicking a button or checkbox. This rings true even if the clickwrap agreement does not require the user to review the terms prior to accepting as long as the user is given an opportunity to review the agreement, and the language and layout of the agreement puts the user on inquiry notice of the terms.
Single purpose buttons or checkboxes are more likely to be valid
The primary purpose of the button often contributes to the validity of the online agreement. Clickwrap agreements employ a “single purpose” button or checkbox, where the user clicks a button or checkbox to agree to the terms of the contract.
In these situations, user assent to the online agreement is the only purpose of the button. Our study shows that because they explicitly require that the user manifest assent by clicking the button or checking the box, single purpose buttons and checkboxes are almost always found to create a valid contract.
Learn more about the validity of other forms of online contracts and their win/loss factors by reading the Clickthrough Litigation Trends white paper!