What is a click-wrap agreement?
Because, “what is a click wrap agreement?” is a question we get asked a lot, we’ve created this guide to show how click wrap agreements differ from other agreements.
What is the definition of a click wrap agreement?
A click wrap agreement is a type of online agreement between a user and a service provider.
Also known as a click-through agreement, it requires the user to agree to a website or software provider’s terms and conditions before permitting access.
Remember those pop-up windows that you see when accessing a new website or running the new software.
The ones that ask you to click “I agree” or “I accept”? They’re click wrap agreements.
Think of them as an alternative to an electronic signature (or eSignature).
They often apply to online agreements where users agree to terms or disclaimers and click through via either a click button or a checkbox.
Typical use cases for click wrap agreements include when users make purchases, download content, or complete a license agreement.
Typically seen in B2C businesses, the reasons organizations use click wrap agreements are to mitigate risk without affecting conversion rates or impacting the customer experience.
What is the history of click wrap agreements?
Click wrap agreements were originally known as shrink-wrap agreements.
The term “shrink-wrap” derives from software manufacturers trying to print the entirety of license text on the outside of the product box.
This was so it would be visible through the cellophane wrapping, together with a warning label that by tearing open the seal and opening the box, the user would become accountable to by the license terms.
What are the elements of click wrap agreement enforceability?
While an electronic acceptance method such as electronic signature examples or click wrap agreements are in principle as enforceable as wet signatures, there are standard elements that must meet contract law requirements.
To ensure a click wrap agreement is enforceable, it must include:
- Accessible and easily retained terms and conditions
- Transparency around unusual terms
- Affirmative action to indicate acceptance or agreement (such as ticking a box)
- Comprehensive stored evidentiary records detailing the contract, customer information, and date and time of user site access.
To summarize, a click wrap agreement must encompass three key factors: notice, consent, and fairness.
The signee must be given notice of the agreement, they must consent to the terms, and the agreement must be fair.
What are some examples of click wrap agreements?
A common click wrap agreement example is software licensing.
In this case, a user must agree to the terms and conditions before downloading software.
Let’s take the SOW example.
As they function as both contract agreements and project management tools, this type of document requires a click wrap agreement to capture proof that the work was agreed upon by all parties involved.
How to create a click wrap agreement
To create a click wrap agreement, you’ll need to do more than adding some text on a website stating, “by clicking here you agree to the terms and conditions”.
Consider how you want to manage click wrap agreements:
A click wrap agreement requires a system with back-end tracking functions.
So, firstly, you need to host your business’s terms and conditions online using an <a href> that you can update when necessary.
You can then hyperlink your terms and conditions for users to read on a separate web page. The hyperlink click wrap agreement method is commonly used by e-commerce retailers.
2. Scroll box
Alternatively, you can include your click wrap agreement in a scroll box for users to tick a box as acceptance.
In this instance, users must scroll through the terms and conditions before they’re able to tick the box.
Due to more stringent requirements, a scroll box click wrap agreement is more suitable for circumstances where businesses are at greater risk, such as in the case of a SaaS agreement, or maintenance or service management contracts.
Craft careful wording
Your click wrap agreement must be presented in a clear format with legible terms to avoid confusion.
It’s good advice to speak with contract lawyers to ensure that your click wrap agreements meet legal requirements.
Withdrawing from a click wrap agreement: Is it possible?
It is possible to withdraw from a click wrap agreement. To do so, you must prove procedural unconscionability.
Procedural unconscionability indicates that involved parties didn’t freely consent to a contract’s terms and conditions.
Some examples of procedural unconscionability include duress, illegality, and coercion.
Proving procedural unconscionability allows the court to either void, modify, or invalidate certain terms or provisions of the contract to render it unenforceable.
What are some legal cases involving click wrap agreements?
Exploring the first legal case in more detail, this related to Feldman purchasing advertising from Google’s Adwords.
Feldman claimed he was a victim of “click fraud”, which culminated in increased advertising costs.
The result of this case was that the click wrap agreement was upheld, due to the court’s ruling that Feldman had reasonable notice of the terms and clearly consented to the agreement.
Are click wrap agreements better than electronic signatures?
Both click wrap agreements and electronic signatures have a place in today’s digital world.
While click wrap is considered a more straightforward approach, getting someone to eSign a document is often a better choice for negotiated agreements or more complex contracts.
Click wrap is the simpler option for user experience, but it also offers enforceable back-end records of contract agreement.
Avoid legal troubles with enforceable click wrap agreements
You now no longer need to ask, “what is a click wrap agreement?”.
PandaDoc provides a suite of document management tools that streamline the creation and approval of important business documents.
Access to an extensive library of pre-written templates and electronic signature checkbox examples make it easy for you to create enforceable click wrap agreements in seconds.