Clickwrap agreements and eSignatures belong to the same family of click-to-sign contracts, structured to streamline how counterparties demonstrate consent to contractual terms, conditions, and obligations in a digital environment.
If you’re reading this, you’re probably grappling with the same burning questions as other legal professionals: which digital signing method, between clickwrap agreements and eSignatures, is more legally binding and enforceable? Is it possible to adopt a hybrid approach for signing digital contracts?
To do justice to these burning questions, we will explore the fundamentals of click-to-sing agreements, their key differences, how to choose the right fit, and whether it is possible to leverage the best of both worlds.
What are clickwrap agreements?
A clickwrap agreement is a form of click-to-sign contract where users or customers demonstrate acceptance of Terms and Conditions (T&C) by clicking a button or a checkbox. The user must take this affirmative action before they can proceed with accessing products or services owned by an organization.
“A clickwrap user agreement requires the user to take some type of affirmative action to acknowledge their consent. Typically, they need to tick a box affirming that they have read and agree to the terms. An even stronger type of clickwrap requires the user to “scroll” through the user agreement before they have the ability to accept it. The more steps the user must take to “agree,” the stronger the odds of enforcing the agreement.”
~ Sterling Miller, CEO and Senior Counsel, Hilgers Graben PLLC
Ten Things: Web User Agreements
Clickwrap agreements are designed to curb the challenges of “implied awareness” associated with browsewrap agreements, where users are not required to actively confirm their acknowledgment and acceptance of company T&Cs before accessing products and services.
They are commonly used in web agreements, specifically in software licensing, e-commerce, and membership subscription services.
Also read: Clickwrap Agreements: The Ultimate Guide
What are eSignatures?
At the basic level, electronic signatures, often called eSignatures, refer to digital markers, symbols, or a combination of characters representing a stakeholder's consent to contractual terms and their commitment to fulfilling obligations stipulated within the contract.
Per ESIGN Act and UETA definitions, eSignature can exist in various formats like signatures drawn on touchscreen devices, names typed in textboxes, personal identification numbers, fingerprints, cryptographic keys, and mouse clicks.
Compared to traditional wet ink signatures, electronic signatures offer several advantages, including convenience, security, and efficiency. With electronic signatures, signees are not limited by location, time constraints, or the need for physical presence.
“Helping get contracts [signed] faster and with less friction is just the kind of achievement legal departments should be proud to brag on and use as a way to show value.”
~ Sterling Miller, CEO and Senior Counsel, Hilgers Graben PLLC
Ten Things: Electronic Signatures (What In-House Counsel Need To Know)
Also read: A Quick Introduction to eSignatures
Click-to-sign: Clickwrap agreements vs eSignatures
While both click-to-sign contracts, clickwrap agreements and eSignatures, are designed for collecting consent in digital contracts, they have their own distinct characteristics and serve different fundamental purposes. This is demonstrated in the range of their application, implementation methods, user experience, and more.
In this section, we will highlight their fundamental attributes, exploring their differences in more detail.
#1 Scope of application
Clickwrap agreements are commonly used in software applications, e-commerce platforms, membership subscription services, surveys, and other relatively simpler web-based agreements.
eSignature, on the other hand, comprises a variety of electronic signing methods. Thus, its scope of application is widespread. eSignatures can be used in various industries and more complex contexts beyond web agreements. This includes commercial contracts, employment agreements, government deals, real estate contracts, and much more.
#2 Application method
Clickwrap agreements allow users and customers to consent to contractual agreements by simply clicking on buttons or checkboxes. This action is required before a user gets access to a product or service offered by a business.
eSignature allows parties to establish consent to contractual terms by appending signatures in a variety of digital formats. The signatures can be hand-drawn on a touchscreen device, typed in a textbox, or implemented in other ways.
Also read: Contract Signing Unveiled—A Step-By-Step Guide
#3 Enforceability
Enforceability is typically evaluated based on factors such as consent, intent to sign, identity verification, audit trail, and compliance with applicable laws and regulations. Thus, clickwrap agreements and eSignature methods are generally enforceable, provided they’re implemented in accordance with existing best practices and regulatory standards.
Also read: Ensuring That Your Electronic Contracts are Legally Binding
#4 User experience and convenience
Clickwrap agreements are considered relatively more convenient than most eSignature methods. They don’t require any sophisticated tools or skills, just clicks. They do not often disrupt commercial or registration processes as much as other eSignature forms.
eSignatures may require additional steps, such as authentication or identity verification, but provide a more formal and traditional signing experience.
#5 Record keeping
Clickwrap agreements often make provisions for record-keeping. When a user or customer clicks a button or checkbox, the system automatically grabs crucial elements like screenshots, the document version, the timestamp of acceptance, and more. This is often helpful when proving your case in court.
“Think about how many contracts sit on someone’s laptop or in multiple databases and then think about the value of contract management. The importance of simply being able to locate all of the company’s contracts and relevant amendments in one place without significant effort cannot be minimized.”
~ Sterling Miller, CEO and Senior Counsel, Hilgers Graben PLLC
Ten Things: Minimizing Risk In Commercial Contracts
Generic eSignature methods often involve contracts signed and stored in disparate locations. Thus, legal teams using generic eSignature tools may often find themselves painstakingly digging through emails and storage drives in search of signed documents.
However, this challenge can be solved using a Contract Lifecycle Management (CLM) solution with eSignature functionalities. We’ll touch more on this later.
Also read: Contract Storage—Tips to Store Your Contracts Effectively
Choosing the right click-to-sign approach for your business
Considering their distinct characteristics and capabilities, click-to-sign agreements are suitable for different contract types and end users.
The right click-to-sign approach will depend on your individual business needs, target users, and priorities. In this section, we've discussed some crucial factors you must consider before choosing your preferred click-to-sign method.
#1 User experience and acceptance rates
Consider the user experience and acceptance rates of your target audience. If speed, convenience, and simplicity are paramount, clickwrap agreements may be more suitable. However, if the signing process needs to meet traditional expectations, e-signatures might be the better choice.
#2 Legal requirements and compliance
Different countries and regions have varying legal frameworks regarding click-to-sign agreements. Evaluate the legal requirements in your jurisdiction and industry, as well as the different levels of security and authentication required for your agreements.
Clickwrap agreements are typically simplistic, with fewer security levels and encryption mechanisms than eSignatures. Thus, if your local laws and industry regulations require comprehensive security measures for digital contracts, consider using eSignatures over clickwrap agreements.
#3 Complexity of contracts
Consider the nature of your agreements and whether they require customization, multiple signatories, or advanced features beyond simple acceptance of terms. If your contracts involve multiple rounds of negotiation, custom terms, or specific legal requirements, eSignature solutions may be a better fit for your business.
However, if your agreements are standardized, with predefined terms and conditions that users simply need to accept or reject, clickwrap agreements may be more suitable.
Getting the best of both worlds
It is true that clickthrough agreements differ from eSignatures in complexity, use case, convenience, and robustness.
However, it doesn’t mean you should stick to one and completely ignore the other. In fact, by leveraging the strengths of both methods, you can optimize your digital agreement processes and provide better experiences for your customers and prospects.
But how do you seamlessly integrate both methods into your contract management process? The answer is: by using a CLM with clicktrhough and eSignature functionalities.
SpotDraft is one of the few CLMs in the industry that gives you access to eSignature and clickthrough agreement tools in one robust platform. Its eSignature functionality supports a wide variety of methods for collecting eSignatures—textbox, hand-drawn, signee initials, and more. It also supports multiple signatories and enables you to set up automated workflows for collecting signatures.
With its clickthrough functionality, you can embed clickwrap agreements in your websites, apps, and digital devices. That way, you will close standard agreements ten times faster without compromising on quality, compliance, and enforceability.
The eSignature and clickthrough tools make up a comprehensive suite of solutions within the SpotDraft ecosystem, designed to collectively streamline every aspect of your contract lifecycle management, helping you close deals faster while keeping you safe from legal and compliance loopholes.
Some of its other instrumental functionalities include a central repository for efficient record-keeping, automated workflows for streamlining routine processes, standardized templates for accelerating contract creation processes, and much more.
Want to see how SpotDraft Clickthrough can change the game for your legal team? Click here to learn more.
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