As more organizations take their businesses online, the importance of web contracts is increasingly evident.
Companies document terms and conditions on their websites, software applications, and other digital channels to regulate how customers, business partners, and employees engage with them. However, there are several inherent challenges associated with this process.
- Users rarely read through lengthy walls of legal text online
- Businesses often have difficulty proving consent
- Disputes can arise over what was or was not understood.
This often leads to costly risks, compliance issues, and an erosion of user trust, as was the situation between Zappos.com and its customers in 2005.
Companies are hard-pressed to find effective ways to ensure that business partners and customers not only read and understand their terms but also establish admissible consent.
In this guide, we will discuss how clickwrap terms and conditions (T&Cs) solve these challenges and how you can use this mechanism to achieve the best results.
What is a clickwrap T&C?
A clickwrap T&C is a digital contract in which counterparties must deliberately agree to specified terms and conditions by taking required actions, such as clicking a designated button or ticking a checkbox, before engaging in transactions with a business.
Forward-thinking businesses in online environments commonly utilize Clickwrap T&Cs to establish terms of use for their online platforms, products, and services. This ensures that users are aware of and consent to the rules governing their interactions, minimizing the risks of legal disputes, non-compliance, and liabilities.
Also Read: Clickwrap Agreements—The Ultimate Guide
Components of a clickwrap T&C
The image above is a typical example of what a clickwrap T&C looks like—a straightforward yet efficient way to protect your organization’s interests in web agreements.
Let’s explore the various components that make this mechanism work.
#1 The notice
“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
Before accessing a product or service owned by a business online, the user typically sees a statement underscoring the existence of terms and conditions and the need for their consent.
#2 The terms and conditions
This is the heart of the agreement, where everything the user needs to read resides. You can serve the terms and conditions in a pop-up window or hyperlink it from a separate page.
Here, the business can detail various clauses related to its products or services. This typically covers the scope of use for the website, app, or product, the rights and responsibilities of both parties, dispute resolution procedures, and more.
Also Read: 4 Basic Contract Terms & Conditions And How To Write Them
#3 Mechanism for acceptance
The user must indicate acceptance to prove that they have read and are willing to abide by the T&C. They can do this by:
- Clicking an "I Agree" button or
- Clicking a checkbox that says "I Agree to the Terms and Conditions" or something similar.
#4 Record of acceptance
After taking the required affirmative action, the system automatically creates a record of the clickwrap contract. This record typically contains information like the date and time of acceptance, the IP address of the device used, the version of the T&C, and the user’s identifying information.
This creates a digital trail that can be instrumental in legal proceedings.
Also read: Tips to Store Your Contracts Effectively
Benefits of using a clickwrap T&C
Unlike its browsewrap counterpart, a clickwrap T&C emphasizes explicit consent, preventing users from proceeding with transactions with a business unless they indicate agreement to established terms of use.
This presents numerous benefits for organizations running their business on digital channels. Some of which we’ve discussed below.
Also read: Are Clickwrap and Browsewrap Agreements the Same?
#1 Amplifies enforceability
“If you are sued by a user can you quickly do the following: (a) know when the user accepted the agreement; (b) prove (technically) that the user accepted; (c) know which version of the user agreement the user accepted (and have copies of all versions of the user agreement); (d) show when modifications to the user agreement were made; and (e) show when the user accepted any modifications? If the answer to these questions is “yes”, you are way ahead of the curve.
~Sterling Miller, CEO and Senior Counsel Hilgers Graben PLLC
Ten Things: Website User Agreements
Clickwrap T&C often has a stronger legal weight than its browsewrap counterpart. The explicit consent obtained through clickwrap ensures that users are fully aware of and agree to the terms laid out by the organization.
This clarity enhances the terms' enforceability, making it easier for businesses to take action in case of violations or disputes.
Additionally, the records generated by clickwrap T&Cs can serve as invaluable evidence in legal proceedings, bolstering the organization's ability to enforce its policies.
Also Read: Is a Clickwrap Agreement Legally Enforceable?
#2 Enhances user trust
By requiring users to deliberately agree to terms through a clickwrap agreement, businesses demonstrate a commitment to transparency and accountability. The T&Cs stipulate the user's responsibilities and any guarantees the organization offers to parties engaging with them.
By being transparent with its guarantees and limitations, companies can secure trust and streamline transactions with customers and partners.
#3 Improves compliance
Clickwrap T&Cs play a crucial role in ensuring compliance with various data privacy and consumer protection laws. Many regulations, like the GDPR, require businesses to obtain unambiguous consent for collecting and processing user data.
A clickwrap agreement provides a clear and documented mechanism for obtaining this consent. This protects your organization from hefty fines and potential legal repercussions associated with non-compliance.
#4 Protects your business’s interests
A clickwrap T&C functions as a powerful safeguard for your business's interests. It allows you to clearly define acceptable use of your products or services, minimizing misuse and potential damage.
You can include clauses outlining your intellectual property rights, limiting your liability in specific situations, and establishing the process for dispute resolution. This helps you mitigate risks and protect your organization’s assets.
Common use cases for clickwrap T&Cs
Clickwrap T&C is an indispensable tool for facilitating safe and compliant business interactions in digital environments.
They're often deployed in online business scenarios where the counterparty engages in little to no negotiation. Thus, with clickwrap, companies can implement standard T&Cs at scale to simultaneously execute similar transactions across multiple user accounts.
Here are typical use cases:
#1 Software licensing
When distributing software, either as a download or a web-based service, clickwrap T&Cs outline the specific ways a user can utilize the software.
These terms cover aspects such as permitted usage, intellectual property ownership, restrictions on reverse engineering, and limitations of liability for the software company.
#2 Online sales
Customers often encounter clickwrap T&Cs on e-commerce checkout pages. These T&Cs articulate the terms of purchase, such as pricing, payment methods, return policies, shipping information, and any applicable warranties.
#3 Subscription services
Businesses offering subscription-based services, such as streaming platforms or SaaS providers, rely on clickwrap T&Cs to establish contractual relationships with users. These agreements may outline subscription terms, billing cycles, cancellation policies, and usage rights.
#4 Employee onboarding
Organizations can also use clickwrap T&Cs for employee onboarding. Employees may encounter them while creating accounts on the company’s internal systems or digital platforms, such as HR portals, in-house collaboration tools, or expense management systems.
These agreements typically cover policies on confidentiality, data protection, acceptable use of company resources, and employee code of conduct.
#5 Financial services
In online banking, loan applications, and payment processing services, clickwrap T&Cs play a crucial role in establishing legal relationships between financial institutions and customers.
These agreements detail account terms, transaction policies, liability limitations, and regulatory compliance requirements, mitigating legal risks and ensuring adherence to industry standards.
Important considerations for effective implementation of clickwrap T&Cs
Getting the most out of clickwrap T&Cs requires a careful, strategic, and user-centric approach. This means ensuring that every aspect of the clickwrap contract is on point, from user experience and messaging to compliance and enforceability.
Here are some crucial things to keep in mind.
#1 Strike a balance between non-disruptive placement and noticeability
How you present your clickwrap T&C is as crucial as its content. You want to ensure users don't miss it, but at the same time, avoid making it disruptive to the overall flow of their experience.
Ideally, it should be placed right before the final step of a transaction or signup. For instance, on a purchase checkout page, the "I Agree" button would be near the "Place Order" button. This ensures the user sees the T&C and has the immediate option to agree before completing the interaction.
Avoid hiding the agreement in fine print or placing it in an obscure corner of the screen.
#2 Consider using a specialized platform for generating your clickwrap contracts
You could design and deploy your clickwrap T&Cs. However, while this may not be the most technical project you’ve handled, it can be a serious time burner when you consider what it takes to draft the terms, design the clickwrap, create integrations to storage systems, and more.
Platforms like SpotDraft Clickthrough are specially designed to eliminate these technical challenges, allowing you to generate clickwrap contracts in minutes—not days. Through specialized platforms, you get access to templates, customizable functionalities, version control, audit trails, reporting tools, and much more.
This allows you to roll out clickwrap contracts more efficiently without compromising industry best practices.
#3 Always update your T&Cs with evolving compliance requirements
Laws governing data privacy, consumer protection, and online commerce are constantly changing in response to the current realities of the business ecosystem.
It is important to stay informed about the latest developments in your jurisdiction and revise your clickwrap T&Cs accordingly.
#4 Keep your terms concise and easy to read
No one likes wading through a wall of legal jargon. Write your clickwrap T&Cs in plain, understandable language. Avoid excessive technical terms or convoluted sentence structures. The goal is to make the terms easily digestible for the average user, promoting comprehension and fostering trust. If necessary, simplify complex legal concepts or provide summaries in lay terms.
#5 Ensure you connect your clickwrap T&Cs to a robust record-keeping system
The greatest strength of any clickwrap contract lies in its enforceability, which depends on reliable records. Integrate your clickwrap agreements with a secure system that logs the time and date of acceptance, the user's IP address, and the specific version of the T&C they agreed to.
This documentation is a valuable audit trail you can reference in legal proceedings or regulatory inquiries.
Improve enforceability with SpotDraft Clickthrough
SpotDraft Clickthrough is a dedicated clickwrap contract manager designed to help businesses deploy clickwrap contracts and secure consent in the easiest way possible.
Fitted with some of the best functionalities in the industry, SpotDraft Clickthrough eliminates all the technicalities, helping you create enforceable clickwrap contracts in just a few clicks! This includes templates for various forms of standard web contracts, a centralized repository, real-time terms updates, and reporting functionalities, among others.
“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
Ready to experience your first instant clickwrap contract? Click here to get started!
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