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Not All Clickwrap Agreements Are Created Equal

Feb 18, 2015 4:52:36 PM

Think click wrap agreements are enforceable by just slapping some legal terms into a form? Think again!

We've covered clickwrap best practices on this blog before, and covered lots of cases where good clickwrap agreements have been found enforceable. A recent decision published in Illinois Federal Court illustrates just how tricky it can be to create a clickwrap agreement that will hold up in court (and if it doesn't hold up in court - what good is it?)

SGOUROS v. TransUNION CORP is one of your typical class action cases where the defendant tries to quash a class action lawsuit by enforcing an arbitration provision. In this instance, the arbitration provision in question was part of a set of legal terms presented to the website user inside of a scrollable window - normally a great way to do it. Here is the problem, though:

This is a bad clickwrap.

Here is what the court said about this:

Here, the Authorization Paragraph was placed in between the Window and the Button, instructing that users clicking the Button agreed to authorize Defendants to obtain their personal information. The literal text of the Authorization Paragraph was so explicit that it was reasonable for users to assume that their click merely constituted their assent to the authorization, not to the terms in the Window.

The layout of the Window, the Button, and the Paragraph may have provided reasonable notice of the existence of the terms. However, it did not provide reasonable notice that a users' click would constitute assent to the terms in the Window. Rather, the placement of the Authorization Paragraph made it confusing enough to mislead a user to assume that he was agreeing to the terms of the Authorization Paragraph. Therefore, this Agreement is not a valid clickwrap agreement.

OUCH!

The court also goes to find that the Service Agreement did not constitute a valid browsewrap agreement - but that happens ALL THE TIME.

The big takeaway here is that presentation / delivery of a clickwrap agreement can be trickier than you think. Reasonable notice of the terms is not enough - there also must be reasonable notice that clicking a button, checking a box, or whatever method is used - constitutes acceptance of the agreement.

Be careful out there! And if you don't want your business to suffer the same fate, PactSafe can help!

Protect your company with the PactSafe solution.

Brian Powers

Written by Brian Powers

PactSafe CEO & Founder

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