A very significant portion of Internet commerce today depends on the use and enforceability of “click-wrap” license and service agreements – legal terms that typically are presented to a customer during the service-ordering or software-installation process and that usually do not allow for any negotiation or modifications by the customer. Click-wrap agreements represent the evolution of “shrink-wrap” agreements, which for many years have been attached to the packaging of software products purchased in stores. As with shrink-wrap terms, the use of click-wrap agreements is not surprising, given the fact that most consumers of software or other products and services delivered over the Internet do not want or expect to sign more traditional contracts in order to use those products and services. However, many courts scrutinize click-wrap agreements more closely than they would review more traditional contracts, because the contract-formation process often is more difficult to document. Here are three tips to improve the enforceability of your click-wrap agreements:
- “Force” Customers to Review the Terms. The biggest factor in successfully enforcing click-wrap terms usually is whether the customer had reasonable notice of those terms and clearly indicated his or her assent to the agreement. It is not enough in many cases simply to include a link to a click-wrap agreement during the ordering process that the customer is free either to click or not to click. It is much better practice to display the full agreement on screen as a mandatory step in the process and to require the customer to place a check in a box or click on a button or link that says “I Agree” or “I Accept.”
- Document the Transaction. Having a solid contract-formation process is critical, but the mere existence of that process may not get you very far in the context of a dispute if you are unable to show what steps a particular customer took during the process and what specific terms were presented to him or her at that time. It is very important for your e-commerce system to create a paper-trail that clearly reflects all information submitted, the date submitted, and the terms that were presented and accepted by the customer.
- Beware of Prior Agreements. In many cases, businesses may want to transition from a paper-based contracting process for their products and services to a more efficient, electronic process incorporating click-wrap terms. However, in those circumstances there is a risk that previously signed agreements still in effect may include language prohibiting any contract modifications without a writing signed by both parties. Under those circumstances, even if the customer accepts the click-wrap terms, a court may refuse to enforce those terms because they are not “signed” and therefore are ineffective to modify the original agreement. Businesses contemplating such a transition should work with counsel to determine whether it is possible to move existing customers to click-wrap agreements and also to determine what options exist if prior agreements include prohibitions against unsigned modifications.