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Litigation involving ‘wrap agreements (clickwrap, sign-in-wrap, and browsewrap) has increased dramatically over the past two decades, and the reasoning behind enforceability of these agreements continues to evolve.
The global pandemic led to a huge shift towards online business, with e-commerce sales increasing 30% in the first two quarters of 2020 alone. As a result, the enforceability of these agreements continues to be important for companies across various industries. As courts and lawyers become more familiar with ‘wrap cases, PactSafe outlines several predictions we expect to see.
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Clickwrap litigation has increased close to 700% since its inception in the early 2000s, and this trend will continue. As more business moves online, more companies will rely on their terms to shield them from liability, mitigate risk, and address disputes in their preferred manner.
As companies depend on the enforceability of their online terms more and more, they will lean towards using clickwraps and sign-in-wraps rather than browsewraps.
It’s no secret that browsewraps are rarely enforced. Time and again, courts find that browsewrap agreements fail to put users on notice of the terms. Sign-in-wraps and clickwraps, on the other hand, are more likely to alert users of the terms and that they are agreeing to them. Though sign-in-wraps are not enforced as often as clickwraps, they still fare better than browsewraps.
There will continue to be a decrease in successful outcomes for companies trying to enforce their terms in court using a clickwrap, sign-in-wrap, or browsewrap. This is because as courts encounter these types of cases more and more, they become smarter and more demanding with their evidentiary expectations. Furthermore, courts will be more nit-picky with screen design now that many good and bad examples exist to compare the screen at issue to.
Screenshots and sworn testimony explaining the contracting process are the most valued pieces of evidence companies can bring to the table because they let the court really know what was going on when the user encountered the screen. Back-end records of acceptance are extremely important in proving that a particular user agreed to a certain set of terms.
Companies are beginning to understand the reach of what ‘wrap agreements can do to streamline business. Many contracts that traditionally undergo redlining and negotiation can become standardized, such as license agreements companies wish to keep consistent across the board. These contracts may be accepted with little to no pushback if presented to the signer in a certain way, such as with clickwrap agreements.
Related Content: Clickwrap Litigation Trends: 2020 Report
Additionally, other legal terms companies use already require little to no redlining, such as non-disclosure agreements, non-compete agreements, as well as other employment agreements. Clickwrap is a great option for having those agreements signed quickly. In general, ‘wrap agreements can be used to improve workflows, increase productivity, and streamline business processes.
Another area where ‘wrap agreements, especially clickwrap, will play a more prominent role is with compliance efforts. A number of regulations across the different industries require opt-ins, opt-outs, express consent, and disclosures to be made. Clickwrap agreements provide a great means of complying with these requirements, as well as tracking compliance.
For example, CAN-SPAM requires all email marketing communications to include a way of allowing consumers to opt-out of receiving communications in the future. This can be handled with a simple clickwrap. Similarly, GLBA requires financial institutions to give users an opportunity to opt-out prior to sharing their personal information with unaffiliated third parties. This can also easily be done using clickwrap.
Follow PactSafe on social media and tune into the Wednesday Court Report to understand the latest trends with ‘wrap litigation! Or download our 2020 litigation trends report.