Definitions

Clickwrap

Clickwrap

[klik-rap]

A clickwrap agreement (also known as a "clickthrough" agreement or clickwrap license) is a common type of agreement (often used in connection with software licenses). Such forms of agreement are mostly found on the Internet, as part of the installation process of many software packages, or in other circumstances where agreement is sought using electronic media. The name "clickwrap" came from the use of "shrink wrap contracts" commonly used in boxed software purchases, which "contain a notice that by tearing open the shrinkwrap, the user assents to the software terms enclosed within".

Click-wrap is the electronic equivalent of the shrink-wrap method which allows users to read the terms of the agreement before accepting them. The click-wrap method was presented to the court in ProCD v. Zeidenberg, 86 F.3d 1447 (7th Cir. 1996), where Zeidenberg purchased a CD-ROM, created by ProCD, which contained a compilation of a telephone directory database. Upon purchase of this CD-ROM, Zeidenberg installed the software onto his computer then created a website which offered to visitors the information contained on the CD-ROM at a price less then what ProCD charged for the software.

Prior to his purchase of the software, Zeidenberg may not have been aware of any prohibited use or dissemination of the product without consent by ProCD, however, upon preparing to install the software onto his computer, the software license appeared on his computer screen and would not allow him to continue with the installation without indicating acceptance by clicking his assent in a dialog box.

The court held that Zeidenberg did accept the offer and the terms contained within the license by clicking through the dialog box. Zeidenberg had the opportunity to read the terms of the license prior to clicking the acceptance box. The court further stated that Zeidenberg could have rejected the terms of the contract and returned the software. (Id.).

The content and form of clickwrap agreements vary widely. Most clickwrap agreements require the end user to manifest his or her assent by clicking an "ok" or "agree" button on a dialog box or pop-up window. A user indicates rejection by clicking cancel or closing the window. Upon rejection, the user can no longer use or purchase the product or service. Classically, such a take-it-or-leave-it contract was described as a "contract of adhesion, which is a contract that lacks bargaining power, forcing one party to be favored over the other".

The terms of service or license do not always appear on the same webpage or window, but are always accessible before acceptance, such as through a hyperlink embedded in the product's webpage or a pop-up screen prior to installation. In order to be deemed to have accepted the terms of service, the purchaser must be put on notice that certain terms of service may apply. If the terms of service are not visible and/or accessible, courts have found the notice requirement to be lacking and as such, the purchaser may not be bound to the terms of the agreement.

Legal consequences in the United States of America

Cases

Few cases have considered the validity of clickwrap licenses. However, in the cases that have challenged their validity, the terms of the contract have usually been upheld.

  • Feldman v. Google, Inc., 513 F.Supp.2d 229 (E.D.Pa. 2007) (upholding forum-selection clause)
  • In re RealNetworks, Inc. Privacy Litigation, No. No. 00-1366, 2000 WL 631341 (D. Ill. May 8, 2000) (upholding an arbitration clause)
  • Hotmail Corp. v. Van$ Money Pie, No. 98-20064, 1998 WL 388389 (N.D. Cal. Apr. 16, 1998) (granting preliminary injunction for alleged breach of contract for violating the terms of service by using a Hotmail account to send spam or pornography). The court said that clicking the clickwrap button after notice gave consent.
  • I. Lan Sys., Inc. v. Netscout Serv. Level Corp., 183 F. Supp. 2d 328, 336 (D. Mass. 2002) (upholding a clickwrap agreement on two grounds: first, clickwrap is simply "Money now, terms later" contract formation; second, the court found that the "additional terms" of the clickwrap license was not material under UCC (§207(2)(b)).
  • Bragg v. Linden Research, Inc., 487 F.Supp.2d 593 (E.D. Pa. 2007) found certain aspects of the Second Life clickwrap agreement "unconscionable, and therefore unenforceable."

Caspi v. Microsoft, LLC, held a forum selection clause in an online membership agreement was consented to when the user clicked the "I agree" symbol of the agreement in order to proceed with registration.

It should be noted however that even though courts have ruled some clickwrap licenses to be enforceable contracts, it does not follow that every term of every clickwrap license is enforceable. Clickwrap licenses must still meet the criteria for enforceability of a unilateral form contract.

Cases in detail

In Register.com, Inc. v. Verio, Inc., 356 F.3d 393 (2d. Cir. 2004), Register.com alleged that Verio had breached the terms of use of Register.com's WHOIS database. Verio responded that the terms were not binding since users could access the database with or without expressing consent to the terms. The court ruled in favor of Register.com, holding that contractual relationships could be formed whether or not users are required to express assent prior to using a product or service.
Nor can Verio argue that it has not assented to Register.com’s terms of use. Register.com’s terms of use are clearly posted on its website. The conclusion of the terms paragraph states “[b]y submitting this query, you agree to abide by these terms.’’ (Ex. 27 to Pl.’s Sept. 8, 2000 Motion). Verio does not argue that it was unaware of these terms, only that it was not asked to click on an icon indicating that it accepted the terms. However, in light of this sentence at the end of Register.com's terms of use, there can be no question that by proceeding to submit a WHOIS query, Verio manifested its assent to be bound by Register.com's terms of use, and a contract was formed and subsequently breached.

An earlier case, Specht v. Netscape Communications Corp., 150 F.Supp.2d 585 (S.D.N.Y. 2001), aff'd, 306 F.3d 17 (2d. Cir. 2002), gave perhaps the clearest definition of a clickwrap license.

A click-wrap license presents the user with a message on his or her computer screen, requiring that the user manifest his or her assent to the terms of the license agreement by clicking on an icon. n12 The product cannot be obtained or used unless and until the icon is clicked. For example, when a user attempts to obtain Netscape's Communicator or Navigator, a web page appears containing the full text of the Communicator / Navigator license agreement. Plainly visible on the screen is the query, "Do you accept all the terms of the preceding license agreement? If so, click on the Yes button. If you select No, Setup will close." Below this text are three button or icons: one labeled "Back" and used to return to an earlier step of the download preparation; one labeled "No," which if clicked, terminates the download; and one labeled "Yes," which if clicked, allows the download to proceed. Unless the user clicks "Yes," indicating his or her assent to the license agreement, the user cannot obtain the software.

References

See also

External links

Examples of Clickwrap contracts
Hotmail Free Email signup page uses clickwrap
FTC High-Tech Warranty Forum
Online electronic signatures using clickwrap
T-Mobile uses clickwrap for online phone purchases

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