Increasingly, B2B and B2C companies are moving their businesses online in order to take advantage of the speed, convenience, and popularity of the internet. And as contracts govern the relationship between the website owner and the user, the contracts also need to be hosted and accepted online. As a result, these companies often utilize clickthrough agreements to capture user acceptance of the contract terms. However, clickthrough litigation has increased 626% since 2002. As the volume of clickthrough-related cases increases, the more important it becomes for businesses to know more about the types of online agreements, how they are formed, and what gives you the best chance of defending them in court.
3 ways of forming online agreements
There are three main ways of forming online contracts, each of which utilizes a different way of manifesting assent:
- Clickwrap agreements: The user signifies her acceptance of the contract by clicking a button or checking a box that states, “I agree” (or similar language) after being presented with an agreement.
- Sign-in-wrap agreements: The user is notified of the existence of the contract and is advised that by signing up (or a similar action), the user is agreeing to the contract.
- Browsewrap agreements: The user is notified of the existence of the contract by a link located somewhere on the screen, but the user is not explicitly required to signify assent.
(Note: The term “clickthrough” encompasses clickwrap and sign-in-wrap because the user is required to “click through” and acknowledge the agreement prior to accepting the benefit of what the website has to offer. Browsewrap, however, does not qualify as clickthrough because users are not required to expressly “click through” anything to signify agreement to the terms.)
Courts have routinely recognized that an electronic click of a button or checkbox can sufficiently indicate the acceptance of an agreement. However, the language and layout of the webpage must give the consumer reasonable notice that the click of a button or checkbox will indicate acceptance of the contract.
Clickthrough litigation trends 2002-2018
In 2019, PactSafe conducted a study of trends in clickthrough litigation. In our study, we found that clickthrough litigation has skyrocketed since it first appeared in the courts in 2002, increasing 626% between 2002 and 2018.
The rise in litigation reflects the increase in business to business (B2B) and business to consumer (B2C) internet companies having to defend the enforceability of their Terms of Service and other online agreement terms.
Though each court tends to take its own approach when deciding this sort of issue, PactSafe's study indicates that these types of companies have the best shot of successfully defending their online agreement terms if they are able to provide the court with screenshots, affidavits or declarations, and back-end records indicating the date and time of contract acceptance. This combination of evidentiary support best shows the court that the contract was accepted.
Note: The concept of a sign-in-wrap emerged in 2015, when courts decided to break it apart from clickwrap and refer to it as a hybrid between clickwrap and browsewrap.
Unfortunately, most companies don’t realize that they have a problem with their online agreements until they try to enforce their contract terms in court, such as by trying to compel a mandatory arbitration or forum selection clauses, and the judge rules against the validity of the online agreement.
As more companies continue to put their Terms of Service and other key agreements online without considering best practices or enforceability, clickthrough litigation will continue on this upward trend.
To learn about the factors that influence your chances of your clickthrough being litigated and ways your business can prepare for the best chance of success, read our white paper!