A Non-Disclosure Agreement (NDA) is vital for protecting sensitive information and trade secrets shared during contractual engagements. But let's face it, the endless delays associated with the conventional signing process can be frustrating, to say the least.
To ensure that NDAs are executed within reasonable timeframes, in-house counsel often have to chase after counterparties, reminding them to review and sign the document on time. In a growing organization with a rising number of standard-form NDAs, this challenge can be significantly amplified, stressing the need for a more efficient signing approach.
A clickwrap NDA is an innovative approach to streamlining the NDA signing process, where parties execute their confidentiality agreements in just one click. This eliminates administrative hurdles, accelerating momentum for promising business engagements.
Here, we’ve discussed the essentials of this approach, uncovering its benefits, limitations, and best practices.
What is a clickwrap NDA?
A clickwrap NDA is a form of digitized NDA that allows contracting parties to accept its terms by clicking a button or ticking a checkbox.
This method is often used in situations where every potential customer, employee, or contractor must agree to standard confidentiality terms before entering into a business relationship with the organization.
Here’s how clickwrap NDAs typically work:
- Presentation of terms: Before establishing a contractual relationship with the prospect, the company notifies the prospect of the need to read its NDA. The clickwrap NDA is displayed prominently on a website, within software, or as part of an onboarding process. This could be a pop-up window, a dedicated page, or a part of a sign-up form.
- The clickthrough: To confirm that they have read and consented to the terms of the NDA, they’re required to “sign” by doing either of two things:
- Click a button that says "I Agree" or something similar.
- Tick a checkbox next to a statement like "I have read and agree to the Non-Disclosure Agreement."
- Record keeping: Upon acceptance, the system securely stores a record of the user's consent. This includes details like their name, email address, the date and time of the agreement, and potentially the IP address from which they accessed the NDA.
Only upon the completion of the core steps can both parties enter into a legally binding, enforceable agreement.
Also Read: Clickwrap Agreements—The Ultimate Guide
Benefits of using a clickwrap NDA
Clickwrap NDAs offer a modern, efficient, and secure method for parties to formalize confidentiality agreements. While the approach may appear simplistic, it can benefit your organization in several ways.
#1 Speed and efficiency
Clickwrap NDAs are convenient to execute as they can be signed electronically with just a click, saving time and effort compared to the traditional NDA signing approach, which may require several back-and-forths.
#2 Enforceability
The clear digital record (timestamp, IP address, specific terms viewed) associated with a clickwrap NDA strengthens its enforceability. Once the user clicks to accept the NDA, it becomes harder to deny the agreement if a dispute arises.
“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
#3 Scalability
Clickwrap NDAs shine brightest when dealing with similar agreements in high volumes. This makes them perfect for organizations offering software subscriptions, online services, or any scenario where numerous users must agree to the same confidentiality terms.
Their standardized format and digital presentation allow you to onboard hundreds or thousands of new users with minimal administrative overhead.
#4 Improved tracking
Clickwrap NDAs can be integrated with contract management software, like SpotDraft, enabling easy tracking and reporting.
#5 User-friendliness
The simplicity of clickwrap NDAs makes them more approachable for users. The clear and concise presentation of terms, along with the straightforward "I Agree" action, streamlines the user experience and fosters higher compliance rates.
Best practices for implementing clickwrap NDAs
While clickwrap NDAs offer significant advantages, using them incorrectly can lead to counterproductive outcomes. You must understand their nuances and the various factors that can impact their legal validity.
Here are things to keep in mind:
#1 Understand the limits of clickwrap NDAs
It is important to note that the clickwrap approach is only suitable for standard NDAs, which are generated at scale and rarely require negotiations.
In more complex scenarios, such as vendor agreements, mergers and acquisitions, or other situations involving highly sensitive information, a traditional NDA with negotiation opportunities is likely necessary to address specific concerns and risks.
Also Read: Are Clickwrap Agreements Legally Binding?
#2 Keep your NDAs concise
Avoid overly complex legalese and strive for plain language in your clickwrap NDA. Users are more likely to read and understand shorter, clearly written terms, enhancing the agreement’s acceptance and enforceability.
#3 Never precheck your boxes
Having a pre-checked "I Agree" box undermines the entire concept of informed consent. The user must actively choose to affirm their agreement to the NDA terms. Pre-checking removes that element of choice and can weaken the legal validity of the contract.
Also Read: Designing User-Focused Clickwrap Contracts—Best Practices + Tips
#4 Maintain a comprehensive record of your agreements
“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
Minimizing Risk in Commercial Contracts
Implement a robust system to store and manage the records associated with your clickwrap NDAs. This should include details like:
- User Identification: Name, email, or other identifying information of the user.
- Timestamp: The exact date and time the user accepted the agreement.
- IP Address: The IP address from which the agreement was signed.
- NDA Version: The specific version of the NDA the user agreed to.
These records will be invaluable if disputes arise in the future.
#5 Schedule regular reviews and update your terms when necessary
Laws, regulations, and industry best practices surrounding digital agreements are constantly evolving. To ensure your clickwrap NDA remains enforceable and effective, always review it against the current regulatory standards and business realities.
If you implement changes to your NDA, properly inform all parties and ensure they consent to the updated terms for continued engagement.
Rethinking confidentiality with clickwrap NDAs
Standard-form NDAs don’t have to follow the same drawn-out approach as their complex counterparts. With clickwrap NDA, you can establish an agreement with multiple counterparties at scale without a significant rise in workload.
The promises of clickwrap NDA are, however, obtainable only when you follow its best practices and utilize the right tools. Speaking of tools, SpotDraft Clickthrough can be a game-changer for your organization.
SpotDraft Clickthrough offers an ecosystem of easy-to-use solutions designed to help you secure consent for contracts at high volumes with a single click.
Offering templates and various one-click processes, SpotDraft clickthrough is designed for everyone, regardless of your technical skills. By using this tool, you will be able to launch your first clickwrap NDA and amplify productivity in minutes. Want to check it out? Click here to begin!
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