click-wrap agreement (click-through agreement)

What is a click-wrap agreement (click-through agreement)?

A click-wrap agreement (click-through agreement) is an online agreement in which the user signifies their acceptance by clicking a button or checking a box that states, "I agree." The purpose of a click-wrap agreement is to digitally capture acceptance of a contract.

Click-wrap agreements permit companies to engage in a contract with customers without negotiating with each user individually. To be a considered legitimate, the contract must:

• Be reasonably and prominently visible to all users.
• Require active, affirmative consent.
• Be easily understood by the average user.
• Be enforceable.

Click-wrap agreements are a digital offshoot of shrink-wrap licenses. In the last century, when most software was installed locally, shrink-wrap licenses were commonly used by software vendors to protect their intellectual property. When the customer removed the plastic shrink-wrap that protected a new software floppy disk or compact disk, they were contractually indicating they agreed with the software vendor's terms of service.

Use cases for click-wrap agreements

Today, online users encounter click-wrap agreements regularly. Some examples are the following:

• Asking website visitors to acknowledge that the website they are visiting uses cookies.
• Completing an online registration form.
• Installing a mobile app.
• Purchasing a cloud service.
• Connecting to a wireless network.

Click-wrap agreements and the law

Click-wrap contracts are often used in situations where the same boilerplate contract needs to be offered or signed hundreds, thousands or millions of times. Common uses include contracts that support online privacy policies or terms and conditions for accessing member-protected website content.

It is a best practice to call out the existence of the contract through a pop-up window that has a checkbox and contains language such as, "I agree to the terms and conditions." There should also be a hyperlink to a webpage that documents the full agreement the user is accepting.

Most of the time, click-wrap and shrink-wrap agreements are made and never mentioned or thought of again. If the terms of the contract are violated, however, there can be serious legal and financial consequences.

Should there be a need to defend a click-wrap agreement in court, the entity that issued the contract needs to have sufficient documentation to prove when and where the agreement was signed. This includes an indisputable record of what version of the contract was being displayed at the time the agreement was accepted and how the website looked to the user.