Clickwrap, Browsewrap, Scrollwrap, Sign-in-wrap

Clickwrap, Browsewrap, Scrollwrap, Sign-in-wrap

Website terms of service have become ubiquitous, although few seem to actually read them, including luminaries such as Chief Justice John Roberts¹ and Professor Hubert J. Farnsworth.² The question for any business is: if people are not reading your terms of service, then how do you ensure that they are enforceable?

Clickwrap and Browsewrap

Traditionally, the law has recognized two forms of online adhesion contracts — Browsewrap and Clickwrap. Browsewrap refers to terms of service that appear on a webpage … somewhere. Often the terms are in a link at the bottom of the page, perhaps even off-screen. And they are never highlighted to the user before the user acts on a page. Clickwrap refers to terms of service, whether in a link or on screen, that a user acknowledges by clicking a “I accept” or “I agree” button. If the user does not agree, then the software or website does not allow the user to make use of the service.

The Legal Principles

There’s two principles of contract law at play with the various “wrap” contracts. First, if a person signs a contract without reading it, they are still bound by all the terms of the unread contract. This makes a lot of sense when someone puts a big stack of paper in front of you. Even if you don’t read it, you’re aware you’re doing something by signing it. Second, you don’t necessarily have to sign a contract to make it enforceable. In most cases, simply performing your end of the agreement makes the whole contract valid.

A Historical Shrinkwrap

Stepping back for a little pre-internet history, the two internet wrap agreements are children of an earlier form of agreement called a “Shrinkwrap.” Relying on the legal principles above, computer manufacturers in the 1980s and 1990s began to place license agreements inside the packaging of mail-order computers. The agreements said that if the purchaser did not return the computer within 30 days, then they agreed to the terms. Purchasers were generally held to the terms of these “shrinkwrapped” agreements. By not returning the computer, they performed part of the contract and therefore accepted the agreement. By accepting the agreement, they accepted all the terms of the agreement whether they had read them or not.

Of course, with both the traditional paper agreement and the “shrinkwrap” agreement, the purchaser has a paper agreement physically in front of them. They know it exists. When agreements moved to the online word, courts carried this same principle with them. Thus, they require “Reasonably conspicuous notice of the existence of contract terms and unambiguous manifestation of assent to those terms” in order for the online agreement to be enforceable.³

Under this rubric, courts across the country have generally held clickwrap agreements to be enforceable. In contract, browsewrap agreements, which a user may never be aware of, are generally not enforceable.

Scrollwrap and Sign-in-wrap

Recently, Senior Judge Jack Weinstein in New York wrote a 47 page decision analyzing the law of the “wrap” agreements. Judge Weinstein divided the “Clickwrap” category into three sub-categories — “Clickwrap”, “Scrollwrap,” and “Sign-in wrap.”⁴

For Judge Weinstein, a Clickwrap agreement requires a user “to affirmatively click a box on the website acknowledging awareness of and agreement to the terms of service.”⁵ However, the user does not necessarily have to look at the agreement before clicking “I accept.” For example, there could be a “Terms of Service” link next to the “I accept” button.

“Scrollwrap,” in contrast, is when the user must scroll through the agreement before clicking an “I accept” button. Only when the user scrolls through the whole agreement is the “I accept” button active.

The Judge also characterizes some of these agreements as “Sign-In Wrap” Agreements.⁶ If you have ever signed up for an online service, there was probably text that said something like, “By clicking Sign Up, you agree to the Terms of Service.”⁷ That is a Sign-in wrap, even if you never see the terms of service.

What “Wraps” are Enforceable?

Whether a wrap is enforceable against users depends on a few general principles. First, the agreement will not be enforced if there is no evidence that users knew it existed. ⁸ Thus, most Browsewrap agreements are unenforceable.

Second, a wrap is enforceable when a user is encouraged or forced by the design of the website to view the terms of the agreement. Thus, Scrollwrap is enforceable.The user must scroll through the whole agreement before clicking “I accept.”

Third, the wrap will not be enforced where it is “tucked away in obscure corners of the website where users are unlikely to see it.”⁹ Further, if portions of the wrap materially “alter what a reasonable consumer would understand to be default rights” (e.g., an arbitration provision¹⁰) then those sections need to be highlighted to be enforceable.¹¹ Thus, whether Clickwraps or Sign-in wraps are enforceable comes down to the design choices of the developer.

What’s a Business to Do?

What a business should do depends on the function of the website. If it is critical that the consumer be bound to the agreement – licensing agreements, other IP agreements, nondisclosure agreements, class action waivers, arbitration clauses, etc. – then Scrollwrap is the safest choice. Clickwrap and Sign-in wrap may be used selectively for design reasons, with legal advice. Because they do not create a bright line, in a dispute they will cause a material increase in litigation costs. For example, proving a Clickwrap is enforceable may require expert testimony on website design and perhaps a survey of whether consumers understood there was an agreement. Browsewrap is only appropriate if you really don’t care to enforce the agreement.