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Most enterprise legal teams fail to realize their organizations’ online terms aren’t legally enforceable until it’s too late – and they’re sitting in a courtroom on the losing side of a class action lawsuit.
Today, sign-in-wrap and browsewrap enforceability doesn’t cut it. Your department can’t simply point to the presence of online terms and arbitration clauses and prove a user assents to your deal. You need to be able to prove beyond a shadow of a doubt that every customer explicitly agreed to your terms.
Clickwrap agreements are better equipped to provide the seamless workflow and robust back-end records needed to prove acceptance. Sign-in-wrap and browsewrap, though they can work sometimes if they follow strict best practices, are far from able to get the job done as efficiently as clickwrap agreements.
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But let’s start with the basics.
The first digital storefronts embraced a new way to sell. But it quickly became clear that pen-and-paper agreements needed to be replaced for this channel to work as intended. As a result, enforceability became a priority for legal teams everywhere.
At the most basic level is browsewrap. Browsewrap enforceability asserts that by providing each buyer with an on-screen notice (as well as a hyperlink to your complete online contract), they assent to your business terms. However, using these agreements can make it extremely tough to prove a user agreed to your conditions – or that they ever saw them in the first place.
Sign-in-wrap agreements take online contract enforceability another step forward by requiring a potential shopper to click specific buttons before they can proceed with their purchase. But that doesn’t necessarily mean an individual is affirmatively agreeing to a contract, either.
Enter clickwrap agreements. As a form of electronic signature that’s performed by clicking a button or checking a box that includes acceptance language (i.e. “I agree,” “I accept,” etc.), clickwrap is the best way to limit legal risks without negatively impacting online customer experiences.
Unlike browsewrap and sign-in-wrap, a clickwrap agreement requires uses to explicitly assent to online business terms and conditions before a transaction is completed. This is known as single-purpose buttons (more on that later).And the best part? It collects every relevant data point to create granular audit trails should this evidence be needed later in court.
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In fact, our findings showed a higher acceptance rate for clickwrap agreements (70%) than for sign-in-wrap (64%) and browsewrap (14%).
Because browsewrap doesn’t provide any evidence of affirmative assent to online terms, browsewrap enforceability has the lowest enforceability rate of all the 'wrap agreements.
Sign-in-wrap has been slightly more effective, but not by much. In both cases, users may not be aware that by simply visiting your site or clicking through to the next page (known as dual-purpose buttons) means they’re agreeing with every clause of your digital contract – and courts typically tend to side with the consumer in these instances.
So, why is a clickwrap agreement more likely to be legally enforceable than a browsewrap or sign-in-wrap agreement? Three reasons: single-purpose buttons, better back-end recordkeeping, and legally satisfying screen design.
Unlike sign-in-wrap (that uses dual-purpose buttons) and browsewrap (that doesn’t use buttons), a clickwrap agreement a single button or checkbox to agree to terms, and a separate button to check out, sign-in, or register. This makes it clear to the court that the user is aware of her action and the consequences.
This makes all the difference in court. The unambiguous nature of accepting a clickwrap agreement provides clear and concrete evidence that a user was not only presented with your terms, but that they also took explicit action to “sign” them.
Sign-in-wraps, on the other hand, are less likely to hold up, in part due to their use of dual-purpose button. As the name suggests, a sign-in-wrap uses the same button (or checkbox) to fulfill two purposes: to sign-in/register/check out and accept the terms. Because the assent isn't unanimous, the enforceability of the terms can be called into question. After all, it’s not always clear that by registering to your website or logging in to your online store it means someone’s automatically accepting your contractual conditions.
While sign-in-wrap can hold up in court, it typically makes your case much more complex. A judge must also consider the design, language, and layout of all relevant pages to determine whether users are knowingly entering into an agreement. And it’s usually not wise to leave that up to interpretation.
Trying to enforce browsewrap is an even tougher sell because there’s little evidence to prove user notice at the individual level. If a user ignores a pop-up or misses the link to your complete online terms and conditions, your company can’t say each buyer has knowledge of what they were agreeing to before they finalized their transaction.
Getting users to accept your online terms is challenging. But for many legal departments, the most difficult task is accurately tracking and maintaining granular transaction details. For most class action lawsuits and clickwrap enforceability cases, you need to be able to prove that a user accepted your terms, when they accepted them, and which version of the agreement was live at the time of acceptance.
To successfully protect your digital contracts in court, you need three key pieces of evidence to convince the average judge: back-end records of acceptance, examples of screen design (i.e. screenshots), and affidavits/declarations.
Related Content: 3 Reasons Homegrown Acceptance Tracking Isn't Feasible
And this evidence can be tough to provide if you’re using browsewrap or sign-in-wrap solutions. Since there’s no explicit acceptance action or process, browsewrap enforceability is largely dependent on how clear your website design makes (or doesn’t make) the existence of your terms known to consumers. In the case of sign-in-wrap, back-end records of acceptance can be difficult to produce because there’s no single-purpose button or action in place to prove user assent.
Clickwrap is uniquely positioned to protect your agreement enforceability because it tracks and ties separate back-end records together to prove explicit acceptance of who agreed to your terms, when they accepted them, and how they did so.
Whether you realize it or not, screen design is a crucial element in agreement enforceability. You need to be able to show that users are put on notice of your terms – and what your site looks like, how it’s laid out, and what kind of language it uses to guide shoppers through deal acceptance are all major factors a courtroom will consider.
For browsewrap enforceability, a hard-to-find hyperlink or easy-to-miss notification can make all of your agreements legally invalid. Even with sign-in-wrap, enforceability may be impacted if your screen design doesn’t clearly indicate that there is an agreement and that the individual is expressly agreeing to it.
This concept is called inquiry (or implied) notice. In order to enforce your digital contracts, you must be able to prove that your buyers have sufficient facts that would cause a reasonable person to make further inquiries. As you can imagine, this leaves much up to the court’s interpretation – and good screen design may not be enough to establish inquiry notice at a level that makes your transactions legal.
A clickwrap agreement gives your enforceability an added layer of security by proving every deal was made by someone that understood they were agreeing to your terms – and that they took explicit action to do so.
In the enterprise legal environment, things are changing more rapidly than ever before. Download our Clickthrough Litigation Trends: 2020 Report to stay on top of the clickwrap enforceability trends, best practices, and insider strategies you’ll need going forward.