In 2017, an Uber app user, Spencer Meyer, sued Uber in court over allegations of illegal price fixing, demanding compensation for damages. During its appearance in the district court, Uber moved to enforce arbitration as stipulated in its Terms and Conditions (T&C) page, which was hyperlinked throughout its website.
This attempt failed in the district court as the plaintiff successfully claimed unawareness of the existence of any arbitration clauses. This put Uber’s legal team in a tight position.
However, during a separate sitting in an appeal court, the legal team was able to enforce arbitration, successfully proving that the customer was reasonably aware of the T&C notice, emphasizing its placement and conspicuousness.
The incident highlights the struggles legal teams face with enforcing traditional web agreements. Enforcement remains the number one challenge legal teams face when handling web agreements, as users often claim unawareness of existing T&Cs during court proceedings. Without a systematic way of securing unequivocal awareness during its execution, web agreements can put organizations at risk of non-compliance, severed relationships, and even financial losses.
Clickwrap agreements are structured to mitigate these risks by helping legal teams establish undisputable acknowledgement of T&Cs and successfully enforce contractual terms.
In this guide, we’ll dive into the details of clickwrap agreements, factors that impact their enforceability, and best practices for implementing them.
What are Clickwrap Agreements?
A clickwrap agreement, also known as a click-through agreement or a click-to-accept agreement, is a type of digital contract that requires users to actively indicate their acceptance of T&Cs before using a service, accessing content, or making a purchase. It is commonly used in online transactions, software installations, mobile applications, and website registrations.
In a clickwrap agreement, users are presented with the T&Cs of the agreement, typically in a separate pop-up window, dialog box, or on a dedicated page. The user must take an explicit action, such as clicking a checkbox, a button that says "I agree" or "Accept," or even digitally signing their name to signify their consent and acceptance of the terms.
The image above is a typical example of a clickwrap agreement on a signup page. Every new user must check the box before registering to be a user on the platform.
Without expressly indicating consent, the user or customer will not be able to access the company’s product or services.
This is different from its other formats, like browsewrap, scrollwrap, and sign-inwrap agreements, where it is “assumed” that a user or customer has read and accepted the T&Cs simply because they continued with the signup or purchase process. In this case, the user is not required to take any further action.
“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
Who uses clickwrap agreements?
Clickwrap agreements are common in digital contracts, especially in industries where products and services are accessed through a digital interface.
- e-Commerce websites
- Software and technology companies
- Social media platforms
- Cloud service providers
- Financial services
- e-Learning platforms
- Travel and accommodation websites, and many more.
The clickwrap agreement is usable in any context as long as the transaction is facilitated through a digital or web interface.
Key components of clickwrap agreements
A clickwrap is a reasonably straightforward mechanism. It comprises a handful of simple yet powerful components that ensure its effectiveness and enforceability.
A clickwrap is legally enforceable because of the availability of the following components:
#1 A clear notice
#2 Acceptance mechanism
The clickwrap contains a small check box that must be clicked to indicate acceptance. Users can only complete the signup process if they demonstrate acceptance of the company's terms by clicking on the checkbox.
Also, notice how the box is not prechecked. This ensures that the user checks it themselves, proving complete awareness of their action.
#3 Terms and conditions
You can see the terms and conditions hyperlinked in the clickwrap. These hyperlinks lead to dedicated pages containing the company's different policies. The users are expected to click on the hyperlinked texts to read the content before acceptance.
#4 Record keeping
On the backend, there has to be a mechanism for records of user acceptance, including the date and time of acceptance, the IP address or device information, and any other relevant data.
This is crucial for legal enforcement as it can be used as evidence that the user agreed to the terms and conditions.
Also read: Tips to Store Your Contracts Effectively
Benefits of clickwrap agreements
Unlike browsewrap agreements, clickwrap agreements focus heavily on "undisputable consent and awareness”. Thus, users must take a specific action to get access to a product or service (effectively entering a binding agreement).
This is beneficial for customers and businesses in several ways, some of which are described below:
#1 Ensures that users are aware of applicable T&Cs
By requiring users to actively engage with the agreement before gaining access to a product or service, clickwrap agreements ensure that users have a high awareness and understanding of the terms they agree to.
Users are more likely to read and review the terms when they are presented prominently and explicitly, increasing their comprehension and reducing the risk of unintended consent
#2 Mitigates legal risks for businesses
Courts tend to view clickwrap agreements as more enforceable since they offer a clearer indication of user consent. When users are required to take explicit action to demonstrate their agreement, it becomes harder for them to later claim they were unaware of the terms or did not consent.
In cases where legal proceedings occur, businesses can rely on the clear record of user consent provided by the clickwrap agreement to defend their position.
#3 Streamlines dispute resolution and arbitration provisions
Clickwrap agreements often include provisions for dispute resolution and arbitration, which can help streamline the resolution process in case of disagreements. By including such provisions in the agreement, businesses can establish a predetermined framework for handling disputes, which can save time and costs compared to traditional litigation.
This benefits both parties by providing a more efficient and potentially less adversarial method for resolving conflicts.
Are clickwrap agreements legally enforceable?
“The keys to an enforceable user agreement come down to “notice” to and “acceptance” by the user.”
~ Sterling Miller, CEO and Senior Counsel Hilgers Graben PLLC
Ten Things: Website User Agreements
Enforceability has been a major concern for businesses and legal teams considering the adoption of clickwrap agreements. But, in a nutshell, yes. Clickwrap agreements are legally enforceable, provided they're presented in accordance with established legal frameworks and best practices.
Legal framework and precedents supporting clickwrap agreements
Under the ESIGN Act and UETA, an electronic signature is defined as “an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.”
Clicking a checkbox or performing any action to express consent in a clickwrap agreement automatically demonstrates a user's "intent to sign," which is a core requirement in ESIGN and UETA.
Additionally, UETA includes "the standard webpage click-through process" among processes that qualify as electronic signatures in its definition of terms.
Factors influencing the enforceability of clickwrap agreements
The enforceability of a clickwrap agreement is subject to several factors. Organizations need to understand that clickwrap agreements, like other forms of digital contracts, must be handled with extreme caution, as any identified loopholes can render them unenforceable.
Below are some factors that can determine your clickwrap agreement’s enforceability.
#1 Notice and clarity
To assess the enforceability of clickwrap agreements, courts typically consider the clarity of the clickwrap agreement, how users are notified of the existence of T&Cs, and how the clickwrap agreement is presented on the web interface.
If the clickwrap agreement is presented in simple language and in a way that catches the user’s attention, then it’ll be enforceable in court.
#2 Manifestation of consent
A web agreement that requires users to take specific actions, such as clicking a checkbox or button, to indicate their agreement will likely pass the enforceability assessment. This means that to claim enforceability, companies must ensure their customers have knowingly and actively demonstrated their intention to be bound by its T&Cs.
Passive or implied consent, such as mere use of a website or service (as seen in browsewrap), is generally less enforceable.
#3 Availability of records
A critical part of a clickwrap agreement's enforceability is the business's ability to provide a record of the agreement's acceptance. During legal proceedings, the court will always request evidential records, and if you don't have these, your clickwrap agreement will likely be unenforceable.
Courts consider whether the terms of the agreement are unconscionable, meaning they are overly one-sided or unfairly advantageous to one party. If the terms are considered overly unfair to the customer, the court may refuse to enforce some or all of the agreement.
Types of evidence needed to enforce clickwrap agreements
There have been several court proceedings around clickwrap agreements, some of which involved popular companies like Uber, Google, and Netscape.
During legal proceedings, courts typically ask for proof to determine the existence of consent, notice, and clarity, as well as the fairness of the terms.
Here are some of the things you’d often be asked to present:
The court will usually ask for screenshots showing the user's consent and how the notice was presented on screen.
In this case, they consider whether the content of the clickwrap agreement is clear, conspicuous, and readily noticeable to the user. Factors such as font size, color, and placement of the agreement may be relevant.
#2 Backend records
Backend records refer to data captured during the acceptance of a contract, encompassing information about the individual who accepted the agreement, the acceptance date, and the specific version of the agreement in effect at that time. When utilized as evidence to enforce arbitration, the effectiveness of backend records is greatly enhanced when they demonstrate precise and detailed information.
In other words, when the records clearly demonstrate that a specific user consented to a particular set of T&Cs at a specific time, they are more likely to be enforceable.
#3 Prior notice and revision history
In cases where T&Cs change, and companies claim that customers were duly informed, the court will require the business to show evidence of the notice it sent to its customers.
This can be details of email correspondence or other forms of communication, such as notifications within the company's mobile app or website. This allows the court to establish facts around whether the customer was aware of and consented to the changes.
Examples of clickwrap agreements
A clickwrap agreement can come in a variety of forms. But at its core, it aims to achieve one thing: ensure that users and customers refrain from claiming unintentional acceptance of T&Cs before using products and services.
Let’s look at some common examples.
#1 Software license agreement
When installing software, users are often presented with a clickwrap agreement that outlines the terms and conditions of using the software. Users must click a button or checkbox to indicate their acceptance before proceeding with the installation.
#2 Terms of Service (ToS) agreement
Many websites present users with a clickwrap agreement, usually in the form of a checkbox or button, that they must click to signify their acceptance of the website's terms of service before accessing its content or creating an account.
#3 Online forms
When submitting forms or applications online, users may be required to click an "I agree" checkbox to confirm that they have read and agreed to the terms and conditions related to their submission.
#4 Online purchases
When making online purchases, buyers often encounter clickwrap agreements during the checkout process. These agreements may include terms and conditions related to payment, shipping, returns, and privacy policies. The buyers must agree to these terms by clicking a CTA button or checking a box before completing the purchase.
#5 Subscription services
When subscribing to online services or digital content, such as streaming platforms, music services, or news websites, users are typically required to accept a clickwrap agreement. These agreements outline subscription terms, payment details, cancellation policies, and usage restrictions.
Best Practices for implementing clickwrap agreements
While a clickwrap agreement delivers the needed legal protection for your business, its implementation can also be a stumbling block when done the wrong way. To ensure you get the best outcomes from implementing a clickwrap agreement, incorporate the following best practices:
#1 Keep it minimalistic and visible
Your clickwrap agreement should be as visually simple as possible. Don't use too many colors and fancy designs, as these can be distracting.
Ensure the clickwrap agreement’s placement is prominent on the interface. That way, users can clearly see its content and easily click to express consent. Furthermore, your clickwrap design should be responsive across multiple devices. Test different interfaces to ensure that every angle has been covered.
#2 Use simple language to communicate your terms and conditions
Write the terms and conditions in clear, concise, and jargon-free language. Avoid complex legal terminology that may confuse or deter users from reading the agreement.
Break down the terms and conditions into logical sections with headings, subheadings, and bullet points. This structure makes it easier for users to navigate and understand the content. Also, ensure that important clauses are highlighted so users can easily spot them while skimming through the page.
Furthermore, clarify that users are indicating agreement to the terms and conditions by taking a specific action. Use explicit language such as "I agree" or "I accept" on your buttons and checkboxes to ensure users understand they are entering into a legally binding agreement.
#3 Do not precheck the boxes
Using pre-ticked checkboxes is not illegal in the US. However, it can be controversial. To be fair and transparent, allow your customers and users to check the boxes themselves. That way, you can establish unequivocal user consent and ensure that they have actively acknowledged and accepted the terms and conditions of the agreement.
#4 Keep records of your agreements
Your clickwrap agreement won’t do much for you during legal proceedings if you do not have a good system for storing them. Maintaining a record of your agreement makes it easy to establish proof of consent, giving your organization an edge in case of disputes.
SpotDraft CLM enables you to consolidate your entire agreements in a secure and searchable cloud repository. It implements security measures like access control and end-end encryption to ensure your contract data is protected according to the highest security standards.
The platform also stores timestamps or other metadata to record the date and time users accepted the clickwrap agreement. This helps establish a chronological order of user consent and can be essential during legal proceedings.
Additionally, SpotDraft enables you to maintain an audit trail that tracks any changes or updates made to the clickwrap agreement. This can include a version history, documenting modifications, and indicating when and by whom the changes were made.
#5 Renew agreements for every update
In the event of an update to your organization's policies, ensure that all users and customers are duly informed and required to accept the new updates for continued usage.
Renewing clickwrap agreements for updates minimizes the potential for disputes or misunderstandings between your organization and its users. It ensures that both parties are on the same page regarding the terms and conditions governing the use of your services.
Additionally, having renewed clickwrap agreements provides a clear record of user acceptance for each version of your policies. This documentation serves as valuable evidence in case of disputes, proving that users explicitly consented to the updated terms and conditions.
Say hello to clickthrough on SpotDraft!
As part of our commitment to building the most robust, safe, and productive Contract Lifecycle Management (CLM) platform, we’ve been behind the scenes, populating our ecosystem with new solutions.
“I have seen a demo of SpotDraft’s CLM technology and they should be on your short list of vendors to talk to about a contract management system.”
~ Sterling Miller, CEO and Senior Counsel Hilgers Graben PLLC
Ten Things: Cool Tech for In-House Counsel
With SpotDraft's new Clickthrough functionality, you will be able to achieve a lot more without requiring third-party solutions or running complex codes. You will be able to embed the clickthrough agreement on digital properties like applications, websites, or devices and close standard form agreements 10X faster!
If you have not seen SpotDraft Clickthrough in action, try now.