New York Business Lawyers

Top 5 Ways to Help Ensure Your Business has Click-Wrap Agreements that Work

by / Thursday, 19 January 2012 / Published in Technology & eCommerce

New.York.Business.Law.Industry.Spotlight.TechnologyThe bedrock of nearly any online business operation, from e-commerce sites to social media outlets is the mighty “click-wrap” agreement (a digital extension of the equally mighty but very 20th century shrink-wrap agreement).  These agreements typically carry the terms and conditions that are non-negotiable and must be accepted and ratified by the user prior to registering as a user, downloading software, participating in an online sweepstakes, etc. However, despite the fact click wrap agreements have a long history, they often receive far more judicial scrutiny if the parties end up in court. That is due to the fact that, unlike tangible written agreements, it is often more difficult to demonstrate that a binding all digital click wrap agreement was formed.  The following FIVE tips can help your business avoid this fate:

I. Require an Affirmative Act for User to Convey Assent (to Click or not to Click…)  The operative word in click wrap agreement is “click”.  Hence merely having the agreement as a permalink at the bottom of the site is insufficient to demonstrate that a user really had adequate notice of its existence and, further, the user actually agreed to it.  Hence having a means to make the agreement a mandatory part of the process (registering, ordering, etc.) is the best course for demonstrating the agreement was assented to and, as a result, binding.   The current du jure method is to employ a check the box or click the button marked “I Agree” or “I Accept.”

II. Allow the User to Exit the Process at Any Time.  Providing the user a clear, manageable way to not assent to the agreement is just as strong a requirement, as providing a clear means to show assent.  In other words, just as the check the box indicates assent, having a means for the user to exit the process demonstrates that the process is voluntary and that any assent was not made under duress.

III. Keep Accurate Records of the Process. If a tree falls in the forest and no one heard it did it really fall?  Implementing a robust framework to show assent or non-assent will not help your cause, if you do not have the record keeping to corroborate it.  In short, you must be able to adequately demonstrate what steps the user undertook during the click wrap agreement process and what that user actually saw during that process. Hence, your platform should have the technical ability to create a record of the transaction indicating what documents were submitted to the user, the time and date of that submission, as well as the user’s ultimate actions (e.g., checked the box or not).

IV. Be Aware of whether you are Dealing with Children and Minors.  Increasingly children are using the Internet in the same fashion as their parents, as consumers of information and goods.  And due to the extreme anonymity and automation of the net, many operations fall into the trap of click wrap agreements being given to minors and small children.  In the worst case, those children may seek to use the defense of “infancy” or being a minor to get out of their contractual obligations and restrictions.  So far the legal landscape is fragmented on this issue, with only the 4th circuit saying definitively that clickwrap agreements are enforceable upon minors at this time (A.V. v. iParadigms, LLC, 2009 U.S. App. LEXIS 7892 (4th Cir. Apr. 16, 2009)).

V.  Beware of Legacy Agreements.  Businesses that are seeking to take the leap from paper to digital agreements should be careful not to create a tangled web of conflicting terms.  Without proper vetting of previous agreements and those terms, in particular, language that prevents modification of the legacy agreement without a written and signed instrument, the click wrap agreement could be dead on arrival.  In that event, a court may decline to enforce those new click wrap terms because they were not actually “signed” or because there was no separate signed document to modify the original agreement.  Hence a review of legacy agreements with business counsel prior to click wrap migration is a good idea overall.


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