If your company sells products or services online, the purchase process almost certainly includes a click through agreement, also known as “clickwrap,” “web-wrap,” or “click and accept” agreements. This refers to the button the consumer must click to indicate they accept all of the terms of the sale. If they choose not to accept, the sale will not go through. This agreement often includes intellectual property protections for the company, license restrictions, liability limitations, disclaimers involving warranties, among other standard contract terms.
The large majority of online consumers often click through without carefully reading the terms of the agreement. If a consumer later contests a term in the click through agreement, will a court uphold and enforce the terms of the initial agreement? This is important to know, as an unenforceable agreement can result in liability and losses. Consulting with an e-commerce attorney is the best way to guarantee a legally binding contract.
Court Ruling on “Shrinkwrap Agreements”
“Clickwrap” agreements are legally viewed as akin to “shrinkwrap” agreements, which are the agreements included on the shrinkwrap of computer software. If a consumer opens the shrinkwrap, they are agreeing to the terms, though many consumers never read the text on the package. In one important case in which a consumer challenged a shrinkwrap agreement, ProCD v. Zeidenberg, the court ruled to uphold such agreements if the following are true:
- The agreement terms are commercially reasonable;
- The terms are not unconscionable;
- The agreement is not subject to other valid contract law defenses;
- The consumer had the right to receive a full refund if they rejected the terms of the shrinkwrap agreement.
In another important case, Groff v. America Online, the court decided to apply the law regarding shrinkwrap agreements to clickwrap agreements when it came to enforceability.
The enforceability of clickwrap agreements becomes more complex if the person clicking the agreement is not doing so on their own behalf but on the behalf of a company that is purchasing the goods or services. In such cases, that person must have the authority as an agent of the company to accept the terms of such an agreement. There are additional complications for international transactions.
Discuss Your E-commerce Contracts with a Skilled San Jose Business Attorney
In short, you cannot be certain that your click through agreement is enforceable in every jurisdiction and in every situation. The best way to ensure that any click through agreements or any other business contracts are as enforceable as possible is to have them drafted and/or carefully reviewed by a highly experienced e-commerce business lawyer who understands California laws regarding contracts. Contact Structure Law Group, LLP today at 408-441-7500 or by email for more information about our services.