Minimizing Legal Liabilities With Clickthrough Agreements

Clickwrap or clickthrough agreements are important because they make it easy to get users' consent to your terms of use. They act as a clear record of their permission. They also help you avoid confusion and legal problems later on. 

Of course, those benefits run even deeper. In this article, we’ll talk about the importance of clickthrough agreements in preventing or minimizing legal issues and resolving disputes without costly litigation.

But first, are they legally valid?

Legal validity of clickthrough agreements

“The keys to an enforceable user agreement come down to “notice” and “acceptance” by the user.”

~ Sterling Miller, CEO and Senior Counsel, Hilgers Graben PLLC
Ten Things: Website User Agreements

Clickthrough agreements are considered enforceable contracts, provided they meet certain criteria and adhere to applicable laws. Here are some key factors that contribute to the legal validity of clickwrap agreements:

• Clear and conspicuous presentation: 

Clickwrap agreements must be presented clearly and conspicuously. Users should easily notice the agreement and understand their acceptance is required to use the service or platform.

• Explicit user consent: 

Clickwrap agreements require users to take affirmative action, such as clicking a checkbox or button, to demonstrate their consent. This explicit consent differentiates clickwrap agreements from other online agreement formats like browsewrap, where consent is often implied through continued use of the website.

• Notice and accessibility of terms: 

The terms and conditions linked to the clickwrap agreement should be readily accessible and easy to review. Users should be able to read the entire agreement before providing their consent.

• Unambiguous language: 

The language used in the clickwrap agreement should be clear, straightforward, and devoid of ambiguity. This ensures that users can understand the terms they agree to without confusion.

• Affirmative assent: 

Courts generally view clickwrap agreements as more legally binding than browsewrap or sign-in wrap agreements because users must actively accept the terms. This affirmative assent provides stronger evidence of a meeting of the minds between the parties.

• Record of acceptance: 

Clickwrap agreements typically record the date, time, and IP address of user acceptance. This record of acceptance serves as crucial evidence in case of any disputes over whether the user agreed to the terms.

• Incorporation by reference: 

Clickwrap agreements may incorporate other documents or policies by reference, such as the Privacy Policy or Acceptable Use Policy. However, it is essential that users have easy access to these referenced documents.

• Consent of minors and capacity: 

Clickwrap agreements may require additional considerations when dealing with minors or individuals lacking the legal capacity to enter into contracts. In such cases, parental consent or other safeguards might be necessary.

The validity of clickwraps goes a long way back. For instance, in 1998, a court upheld the validity of the click-wrap agreement, stating that defendants were bound by the Terms of Service they agreed to by clicking "I agree." Here’s exactly how the court put it:

‍“The evidence supports a finding that plaintiff will likely prevail on its breach of contract claim and that there are at least serious questions going to the merits of this claim in that plaintiff has presented evidence of the following: that defendants obtained a number of Hotmail mailboxes and access to Hotmail's services; that in so doing defendants agreed to abide by Hotmail's Terms of Service which prohibit using a Hotmail account for purposes of sending spam and/or pornography; that defendants breached their contract with Hotmail by using Hotmail's services to facilitate sending spam and/or pornography; that Hotmail complied with the conditions of the contract except those from which its performance was excused; and that if defendants are not enjoined they will continue to create such accounts in violation of the Terms of Service.”

The bottom line? Clickwraps are valid and enforceable, just as paper-and-ink signatures.

Also read: Is a clickwrap agreement legally enforceable?

Also read: Clickwrap Agreements: The Ultimate Guide

Mitigating legal risks through clickwrap agreements

Clickthrough agreements have played a significant role in minimizing and even eliminating legal risks for many businesses. They have been instrumental in preventing disputes where customers believed they were treated unfairly or lacked informed consent. A perfect example is a lawsuit involving Verizon, where a customer contested a specific clause in their agreement, claiming inadequate information disclosure.

But to use Verizon's service, the customer had to go through a clickwrap agreement, which required clicking a checkbox to proceed. The customer further argued that the checkbox was small, and the terms, spread across 13 pages, were challenging to read. Despite these arguments, the court ruled in favor of Verizon, stating that the user had received proper notice about the agreement.

Big risk mitigated—Verizon could have left the court with huge fines and huge fines and other potential damages. That’s a big role clickwrap agreements play in minimizing and eliminating legal risk. Here’s a more nuanced look at it.

Informed consent and user understanding of terms

Clickthrough agreements are a game-changer for getting informed consent and ensuring users actually understand what they're getting into. You see, with clickthrough agreements, users are presented with the terms and conditions in a crystal-clear manner. They have to check that box or click that button to show they're on board with the deal.

This transparency is a win-win! Users get to review the terms before they give their consent, and businesses can rest easy knowing users are fully aware of what they're agreeing to. No more "I didn't know!" excuses.

Reducing misunderstandings and disputes

Let's face it - misunderstandings and disputes can be real headaches. By using plain and unambiguous language, clickthrough agreements foster mutual understanding between businesses and users.

The explicit consent obtained through clickwrap mechanisms means everyone's on the same page. Users know what they're signing up for, and businesses can confidently say, "Hey, you agreed to this fair and square!"

Establishing a legally binding contract with users

You can think of clickthrough agreements as digital handshakes that seal the deal. When users click that checkbox, they're officially entering into a legally binding contract with the business.

Courts love it, too! Clickthrough agreements have been upheld time and again in legal battles, standing as solid evidence of user consent. 

Also Read: Finding Common Ground—How to Resolve Contract Disputes

Clickthrough agreement best practices

There’s more to clickthrough agreements than a box saying I agree. To create effective and robust clickwrap agreements, businesses must consider several important factors. Let's dive deeper into each of them:

1. Implementing user-friendly design and interactivity

User experience is at the heart of clickwrap agreements. It's crucial to design the agreement process with users in mind, ensuring it's seamless and easy to understand. This means:

• Using clear and straightforward language that avoids confusing legalese. 
• Displaying the terms and conditions prominently, so users can easily find and review them. 
• Making the acceptance action, such as clicking the checkbox or button, highly visible and straightforward. 

By prioritizing user-friendliness, you build trust and engagement while minimizing the risk of users clicking through without truly understanding the agreement.

2. Tailoring agreements to specific products or services

One size does not fit all when it comes to clickthrough agreements. Different products and services may have unique terms and requirements. So, it's essential to customize each clickwrap agreement to suit the specifics of the offering. 

This involves tailoring the language, scope, and relevant legal clauses to the particular product or service being provided. By doing so, businesses ensure that users receive accurate information and can make informed decisions based on the specific context.

3. Periodic review and updates of the agreements

The digital landscape is dynamic, and laws and business practices change over time. You need to conduct regular reviews of clickwrap agreements to ensure they remain up-to-date, legally compliant, and reflective of the latest industry standards. Periodic reviews help identify potential gaps or outdated provisions and allow businesses to make necessary adjustments to keep the agreements relevant and enforceable.

4. Providing options for users to negotiate terms (when applicable)

While some clickhrough agreements may be relatively non-negotiable, in certain circumstances, businesses may have the flexibility to provide users with the ability to negotiate specific terms. This can be especially relevant in business-to-business (B2B) settings or when offering customizable services. Allowing negotiation within reasonable limits can help build stronger user relationships and foster a sense of partnership.

There are also more granular practices like:

• Having users re-agree if the terms are updated.
• Keeping a record of who accepted which version of the terms.
• Saving screenshots of the acceptance process for reference.Display terms in a scrollable box on the screen.
• Making the hyperlink to the terms clickable and easy to find.
• Encouraging users to read the terms before clicking any checkboxes.
• Using blue and underlined hyperlinks for familiarity.

“Where a website makes its terms of use available via a conspicuous hyperlink on every page of the website but otherwise provides no notice to users not prompts them to take any affirmative action to demonstrate assent, even close proximity of the hyperlink to relevant buttons users must click on—without more—is insufficient to give rise to constructive notice.”

~ United States Court of Appeals for the Ninth Circuit on Nguyen v. Barnes & Noble, Inc.

These best practices create clickthrough agreements that not only comply with legal requirements but also enhance your user’s experience. After all, a well-crafted clickwrap agreement ensures that users are fully aware of the terms they are agreeing to, reducing the risk of disputes and legal challenges. 

A simple way to create clickwrap agreements

At SpotDraft, we’re always on the move to help our clients streamline their contract management and sidestep the many legal risks of wrong contracting. That’s why we’ve created a new clickthrough functionality.

Initially, our clients had to go through a time-consuming process. They had to comb the web for third-party tools to build out the clickthrough agreements and then connect that to their website or deal with complex coding (or coders) to get the job done. It was quite a hassle and often led to delays and frustrations.

SpotDraft's new clickthrough functionality makes things much easier for you. You won't need third-party tools or complicated coding anymore. You can add the clickthrough agreement to your apps, websites, or devices, and close standard agreements 10 times faster! It's a simple and efficient way to get things done without hassle.

Learn more about SpotDraft Clickthrough here.