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Clickwrap vs. Browsewrap Online Legal Agreements

Before delving into the details on notice and enforceability, a review of the differences between online contract forms is warranted.

In a clickwrap agreement, website users manifest acceptance of the contract by clicking a button or checking a box that states “I agree” (or something similar) after being presented with an agreement. Clickwrap agreements derive their name from old-school shrinkwrap agreements used to license tangible forms of software sold in shrinkwrapped packages.

Another means of forming a contract between a website and its users is the browsewrap agreement. For browsewrap agreements, the applicable legal agreements for a website are posted on the website, typically as a hyperlink at the bottom of the site ( i.e. , in the footer). Unlike a clickwrap agreement, where the user manifests assent to a website legal agreement by clicking a button or box, a browsewrap agreement provides for no such express manifestation of assent. Rather, a user gives assent by simply browsing the website. In ruling upon the validity of browsewrap agreements, courts primarily consider whether a website user has actual or constructive notice of the legal agreements prior to using the website. See, Hines v. Overstock.com, Inc., 668 F. Supp. 2d 366 (E.D.N.Y. 2009).

Enforceable Clickwraps: Notice and Assent

Courts typically look at two primary factors when determining the enforceability of a clickwrap agreement: “[1)] did the consumer have reasonable notice, either actual or constructive, of the terms of the putative agreement[;] and [2)] did the consumer manifest assent.” Vernon v. Qwest Communications International, Inc., 09-cv-01840-RBJ-CBS, 2012 WL 768125 (D. Colo. Mar. 8, 2012). This is not as straightforward as it seems, and sometimes can be tricky to implement from a technical perspective. Indeed, just recently a federal court in Illinois ruled that a clickwrap agreement used by Trans Union was not enforceable because the placement of the actual agreement, the text intended to give the user reasonable notice, and the acceptance button were confusing and misleading. Sgouros v. TransUnion Corp., No. 14 C 1850 (N.D. Ill. Feb. 5, 2015).

There are, however, some universal best practices that can be followed to help clients implement clickwraps in an enforceable manner:

1. Provide conspicuous presentation of the online legal agreements during website registration or other clickable transactions with users.
2. Make sure the user is provided clear notice that acceptance of the website legal agreement is required before proceeding with its clickable transaction.
3. Obtain clear manifestation of acceptance from the user. This could be in the form of a check box combined with a statement that checking the box indicates acceptance of a particular agreement.
4. Give the user a clear opportunity to review the website legal agreements. Consider presenting the agreements in a scroll box, and providing an opportunity to download or print the agreement.

Browsewrap Agreements: Constructive Notice

In order for a browsewrap agreement to be binding on a user, the user needs to have what is called “actual or constructive notice” that: 1) the browsewrap exists; and 2) that their use of the website makes them bound to the browsewrap agreement. In other words, if they don't know the agreement is there, and don't know why it is there, it can't be enforced. Probably the most recent high-profile case to discuss the enforceability of a browsewrap agreement is the Zappos.com, Inc. customer data security breach case. In Re Zappos.com, Inc., Customer Data Sec. Breach, 893 F. Supp. 2d 1058 (D. Nev. 2012). In this case, the court debated the enforceability of an arbitration provision found in the Zappos Terms of Use ' presented as a browsewrap agreement. The court chose not to enforce Zappos' terms of use for a number of reasons:

• The Terms of Use hyperlink could be found on every Zappos webpage, between the middle and bottom of each page, but only visible if a user scrolled down. For example, when the Zappos.com homepage was printed to hard copy, the link would appear on page 3 of 4.
• The Terms of Use hyperlink was the same size, font, and color as most other non-significant links.
• The website did not direct users to the Terms of Use when they created an account, logged in to an existing account, or made a purchase.

Browsewrap agreements have frequently been found unenforceable, mostly due to poor implementation and placement. Here are some implementation practices that a lawyer can provide to clients to increase the likelihood of enforceability:

1. Make sure website users have actual or constructive knowledge of the existence of a browsewrap agreement prior to using the site. Links to the browsewrap agreement should be prominently displayed at the top of the page. If a user is required to scroll to the bottom of the webpage in order to see a link to a browsewrap, it is probably not enforceable.
2. If possible, make sure the link to the browsewrap is immediately visible when a webpage opens in a browser window. Remember, if enforceability is questioned, the site must be able to prove and/or explain how the user is made aware of the website legal agreement.
3. Make the link conspicuous ' larger, different font, color, etc. ' differentiating it from other links and content. The link should not be buried among other links.
4. Any clickwrap agreements used on the site should also refer to browsewrap agreements during clickwrap acceptance. This helps defeat potential arguments about lack of constructive notice.
5. A link might not be enough. There should be prominent notice that user would be bound by the website legal agreements by using the site.

The Solution: Recordkeeping Is Crucial to Enforceability

In the traditional contract world, recordkeeping can be as simple as keeping a copy of all signed contracts and any amendments. Online, however, recordkeeping can be very tricky, but it is very important.

Unless tracking and recordkeeping have been established in advance, proving what someone actually agreed to an online agreement can become a technical nightmare and data mining expedition. How do you prove what someone clicked on? What version of an agreement was presented? What was the date of acceptance?

Clients should be advised to generally keep good records of all of this, which means that some technical development will probably be necessary to capture this data. Considerations the client should keep in mind include:

• Keep track of all the facts/data related to website legal agreements as to:
• |
  • When a user accepted an agreement;
  • What version of an agreement was in place when accepted;
  • When modifications are made to an agreement;
  • When modifications are accepted; and
  • Technical proof of acceptance.
• Keep online legal agreements organized in case a due diligence project ever comes up. Employ version control and tracking.

Attorneys cannot prepare online legal agreements and simply pass them along to their clients without guidance on the nuances of implementation and proper record-keeping. The result to the client could be an unenforceable agreement. The result to an attorney could be an unhappy client, or worse, a malpractice claim. By keeping abreast of case law and best practices related to the technical implementation and management of online legal agreements, and in turn properly advising their clients of the same, attorneys will be able to better protect their clients doing business online.

Brian Powers is an Indianapolis-based lawyer and entrepreneur. Powers has practiced Internet law for nearly a decade, working with start-ups and companies that transact business online. He recently launched PactSafe, a cloud-based solution that manages, tracks, deploys and enforces digital legal agreements. Powers can be reached at [email protected].

Signing, dating and keeping a record of a paper contract are standard practice ' afterthoughts most of the time. However, that standard practice does not easily translate to online legal agreements ' the agreements that are native to websites, mobile apps and other digital platforms, such as “Terms of Use,” “Terms of Service,” “Privacy Policies” and disclaimers.

How are those agreements presented on your client's website? How are they accepted on your client's website? How does your client track who is agreeing to what and when they agreed?

The answers to these questions can make or break the enforceability of even the best-drafted agreements ' a problem that has plagued companies like Zappos.com, Overstock.com and TransUnion. Lawyers who routinely prepare online legal agreements stop short of providing complete and adequate legal services when they deliver these agreements to their clients and collect their fees without advising the client on the ongoing management, tracking and enforceable implementation of those agreements. Lawyers can no longer plead ignorance when it comes to the technical implementation and management of the agreements they provide to clients ' it borders on malpractice to do so. If an agreement is not enforceable, why even have one in place at all? This article discusses how lawyers can advise clients how to implement and manage their online legal agreements ' both browsewrap and clickwrap varieties ' to maximize enforceability.

Clickwrap vs. Browsewrap Online Legal Agreements

Before delving into the details on notice and enforceability, a review of the differences between online contract forms is warranted.

In a clickwrap agreement, website users manifest acceptance of the contract by clicking a button or checking a box that states “I agree” (or something similar) after being presented with an agreement. Clickwrap agreements derive their name from old-school shrinkwrap agreements used to license tangible forms of software sold in shrinkwrapped packages.

Another means of forming a contract between a website and its users is the browsewrap agreement. For browsewrap agreements, the applicable legal agreements for a website are posted on the website, typically as a hyperlink at the bottom of the site ( i.e. , in the footer). Unlike a clickwrap agreement, where the user manifests assent to a website legal agreement by clicking a button or box, a browsewrap agreement provides for no such express manifestation of assent. Rather, a user gives assent by simply browsing the website. In ruling upon the validity of browsewrap agreements, courts primarily consider whether a website user has actual or constructive notice of the legal agreements prior to using the website. See, Hines v. Overstock.com, Inc., 668 F. Supp. 2d 366 (E.D.N.Y. 2009).

Enforceable Clickwraps: Notice and Assent

Courts typically look at two primary factors when determining the enforceability of a clickwrap agreement: “[1)] did the consumer have reasonable notice, either actual or constructive, of the terms of the putative agreement[;] and [2)] did the consumer manifest assent.” Vernon v. Qwest Communications International, Inc., 09-cv-01840-RBJ-CBS, 2012 WL 768125 (D. Colo. Mar. 8, 2012). This is not as straightforward as it seems, and sometimes can be tricky to implement from a technical perspective. Indeed, just recently a federal court in Illinois ruled that a clickwrap agreement used by Trans Union was not enforceable because the placement of the actual agreement, the text intended to give the user reasonable notice, and the acceptance button were confusing and misleading. Sgouros v. TransUnion Corp., No. 14 C 1850 (N.D. Ill. Feb. 5, 2015).

There are, however, some universal best practices that can be followed to help clients implement clickwraps in an enforceable manner:

1. Provide conspicuous presentation of the online legal agreements during website registration or other clickable transactions with users.
2. Make sure the user is provided clear notice that acceptance of the website legal agreement is required before proceeding with its clickable transaction.
3. Obtain clear manifestation of acceptance from the user. This could be in the form of a check box combined with a statement that checking the box indicates acceptance of a particular agreement.
4. Give the user a clear opportunity to review the website legal agreements. Consider presenting the agreements in a scroll box, and providing an opportunity to download or print the agreement.

Browsewrap Agreements: Constructive Notice

In order for a browsewrap agreement to be binding on a user, the user needs to have what is called “actual or constructive notice” that: 1) the browsewrap exists; and 2) that their use of the website makes them bound to the browsewrap agreement. In other words, if they don't know the agreement is there, and don't know why it is there, it can't be enforced. Probably the most recent high-profile case to discuss the enforceability of a browsewrap agreement is the Zappos.com, Inc. customer data security breach case. In Re Zappos.com, Inc., Customer Data Sec. Breach, 893 F. Supp. 2d 1058 (D. Nev. 2012). In this case, the court debated the enforceability of an arbitration provision found in the Zappos Terms of Use ' presented as a browsewrap agreement. The court chose not to enforce Zappos' terms of use for a number of reasons:

• The Terms of Use hyperlink could be found on every Zappos webpage, between the middle and bottom of each page, but only visible if a user scrolled down. For example, when the Zappos.com homepage was printed to hard copy, the link would appear on page 3 of 4.
• The Terms of Use hyperlink was the same size, font, and color as most other non-significant links.
• The website did not direct users to the Terms of Use when they created an account, logged in to an existing account, or made a purchase.

Browsewrap agreements have frequently been found unenforceable, mostly due to poor implementation and placement. Here are some implementation practices that a lawyer can provide to clients to increase the likelihood of enforceability:

1. Make sure website users have actual or constructive knowledge of the existence of a browsewrap agreement prior to using the site. Links to the browsewrap agreement should be prominently displayed at the top of the page. If a user is required to scroll to the bottom of the webpage in order to see a link to a browsewrap, it is probably not enforceable.
2. If possible, make sure the link to the browsewrap is immediately visible when a webpage opens in a browser window. Remember, if enforceability is questioned, the site must be able to prove and/or explain how the user is made aware of the website legal agreement.
3. Make the link conspicuous ' larger, different font, color, etc. ' differentiating it from other links and content. The link should not be buried among other links.
4. Any clickwrap agreements used on the site should also refer to browsewrap agreements during clickwrap acceptance. This helps defeat potential arguments about lack of constructive notice.
5. A link might not be enough. There should be prominent notice that user would be bound by the website legal agreements by using the site.

The Solution: Recordkeeping Is Crucial to Enforceability

In the traditional contract world, recordkeeping can be as simple as keeping a copy of all signed contracts and any amendments. Online, however, recordkeeping can be very tricky, but it is very important.

Unless tracking and recordkeeping have been established in advance, proving what someone actually agreed to an online agreement can become a technical nightmare and data mining expedition. How do you prove what someone clicked on? What version of an agreement was presented? What was the date of acceptance?

Clients should be advised to generally keep good records of all of this, which means that some technical development will probably be necessary to capture this data. Considerations the client should keep in mind include:

• Keep track of all the facts/data related to website legal agreements as to:
• |
  • When a user accepted an agreement;
  • What version of an agreement was in place when accepted;
  • When modifications are made to an agreement;
  • When modifications are accepted; and
  • Technical proof of acceptance.
• Keep online legal agreements organized in case a due diligence project ever comes up. Employ version control and tracking.

Attorneys cannot prepare online legal agreements and simply pass them along to their clients without guidance on the nuances of implementation and proper record-keeping. The result to the client could be an unenforceable agreement. The result to an attorney could be an unhappy client, or worse, a malpractice claim. By keeping abreast of case law and best practices related to the technical implementation and management of online legal agreements, and in turn properly advising their clients of the same, attorneys will be able to better protect their clients doing business online.

Brian Powers is an Indianapolis-based lawyer and entrepreneur. Powers has practiced Internet law for nearly a decade, working with start-ups and companies that transact business online. He recently launched PactSafe, a cloud-based solution that manages, tracks, deploys and enforces digital legal agreements. Powers can be reached at [email protected].