clickwrap

This page considers clickwrap, browsewrap and shrinkwrap.

It covers -

• introduction
• agreements
• shrinkwrap
• clickwrap
• browsewap
• mailwrap
• validity
• issues
• studies

Intellectual property aspects of end user licence agreements (EULAs) are discussed in more detail here.

     introduction

What has variously been called click-wrap, browse-wrap, sneak-wrap and even email-wrap has become central to much electronic commerce and - more broadly - to online activity.

It is used -

• to signal user acceptance of a vendor's terms & conditions, eg in buying a software CD-ROM, installing downloaded software, buying a pair of boots from an etailer or signing up with an ISP
• to bound liability in online interaction, including participation in dating spaces and other online fora or virtual worlds
• to specify use of arbitration mechanisms or the law used in disputes involving parties in different jurisdictions
• to invoke user acceptance of far-reaching warranties and disclaimers
• to limit particular uses that would otherwise be permitted by law (eg use contract law to override copyright law)
• as a mechanism enabling electronic contracts and thereby obviating the need for witnesses, ink, a physical signature and paper.

Much use presents no concerns at an operational or public policy level and is underpinned by legislation such as Australia's Electronic Transactions Act 1999 (ETA), the US Electronic Signatures In Global & National Commerce Act and European Electronic Commerce Directive.

However application of different wraps may pose questions about -

• informed consent
• onerous conditions
• waiver of statutory rights
• provisions that are not enforceable
• claims that are simply absurd.

It is clear that many consumers do not read the fine print that forms part of many wrap agreements - discussed here - and that much of the fine print is deliberately presented in a way that inhibits understanding by consumers.

     agreements

In considering those mechanisms it is important to recognise that contracts can be formed in Australian and overseas law without a witnessed signature, and indeed without any writing.

The standard elements of a contract for sale are -

• Offer
• Acceptance
• Consideration (payment)
• Performance (delivery of goods or services).

Not all activity involves a sale; most recorded music and software for example is licenced by the intellectual property owner to the consumer rather than sold outright.

It is also important to recognise that aspects of agreements, online or offline, may be found by courts to be unenforceable. You can, for example, assent to a contract with a provision that requires you to sacrifice your firstborn to the Prince of Darkness but an Australian court will not allow the other party to enforce that provision.

     shrinkwrap

Shrinkrap emerged in the 1980s alongside personal computers, with a recognition that hardware/software developers and their agents could reduce costs and uncertainty by offering a 'take it or leave it' licence rather than negotiating terms & conditions for every consumer.

The consumer signals acceptance of that licence, which might include a warranty of problematical value, by opening the plastic used to seal a box containing software and documentation or by breaking a seal on the oyster case housing a music CD or DVD. The detailed licence terms however might be inside the plastic and thus unreadable until the seal is broken.

In principle some jurisdictions have held that it is necessary to go further and actually install software or view/listen to the contents of the disk. There has been little acceptance of proposals to shrinkwrap books, in particular mass market books rather than unique technical documentation

In practice, as highlighted in exploration of consumer protection issues, many dealers - including some of Australia's largest retailers - have ignored such subtleties and simply refuse to issue refunds once the wrapper has been breached unless satisfied that the disk was defective when it left their hands.

The expansive nature of end user licence agreements underpinned by some software shrinkwrap was parodied by humourist Dave Barry -

By breaking this seal, the user hereinafter agrees to abide by all the terms and conditions of the following agreement that nobody ever reads, as well as the Geneva Convention and the UN Charter and the Secret Membership Oath of the Benevolent Protective Order of the Elks, and such
other terms and conditions, real and imaginary, as the Software Company shall deem necessary and appropriate, including the right to come to the user's home and examine the user's hard drive, as well as the user's underwear drawer if we feel like it, take it or leave it, until death do us part, one nation indivisible, by the dawn's early light, in the name of the Father, the Son, and the Holy Ghost, finders keepers, losers weepers, thanks you've been a great crowd, and don't forget to tip your servers

     clickwrap

Clickwrap (aka click-through and click-&-accept) appeared with the development of net-based electronic commerce.

Retailers for example elicited name, address and other details from potential purchasers as part of online retailing, with acceptance of the vendor's terms & conditions (and the consumer's commitment to the contract) being signalled by a click on the onscreen 'I agree' or 'accept' button or equivalent interactive feature.

Publishers and others placed content behind firewalls for delivery over the web or by email. Access to that intellectual property (eg an audio file, a software upgrade, an image or text) is dependent on the user being alerted that there is a licence and then signalling consent by clicking the button rather than stripping the polyethylene sheath from the shrinkwrapped box of goodies.

Clickwrap has become one of the foundations of electronic commerce, experienced if you want to read the New York Times online, participate in online auction spaces such as eBay or simply accept the latest software upgrade from dominant vendors such as Adobe and Apple. It is consistent with Australian and overseas legislation such as the Electronic Transactions Act 1999 (Cth), discussed here.

     browsewrap

Browsewrap (sometimes disparaged as sneak-wrap or fail-wrap) is more contentious. It involves assertions that merely visiting a web site binds the visitor to terms & conditions set by the site operator, although the visitor may not be aware of those conditions.

Typically content on that site features a link to a separate page that features a licence agreement that purports to bind everyone viewing the content. In contrast to clickwrap, the viewer is not required to signal assent to the terms of that licence by clicking a button and may not conceptualise the visit in terms of a licence.

Depending on the architecture of a site and design characteristics the viewer may not immediately be aware that there is a licence for a site (eg may browse several pages without recognising the link or encountering the licence statement). The visitor might surf the site and/or download content without having to explicitly agree to the licence terms or even read those terms.

As noted below, that has resulted in arguments that browse-wrap licences are unenforceable because it cannot be shown that the user was aware of and positively assented to specific features of the licence.

     mailwrap

Some enthusiasts have sought to apply agreements to email and other communication through inclusion of 'email-wrap' footers in email and fax messages.

Overreaching mailwrap licenses are problematical, because merely sending a message to someone does not constitute acceptance. I can send you an email indicating that reading my message signals your acceptance of terms that you will supply me with your liver and a million dollars. You, along with the court, can laugh.

Mailwrap has inevitably been parodied. Email from US gadfly Cory Doctorow for example proclaims that

By reading this email, you agree, on behalf of your employer, to release me from all obligations and waivers arising from any and all NON-NEGOTIATED agreements, licenses, terms-of-service, shrinkwrap, clickwrap, browsewrap, confidentiality, non-disclosure, non-compete and acceptable use policies ("BOGUS AGREEMENTS") that I have entered into with your employer, its partners, licensors, agents and assigns, in perpetuity, without prejudice to my ongoing rights and privileges. You further represent that you have the authority to release me from any BOGUS AGREEMENTS on behalf of your employer.

     validity

Is use of shrinkwrap and clickwrap legally valid, ie consistent with statute law and with decisions by Australian and overseas courts?

Australia has followed the US, accepting both shrink-wrap and click-wrap in principle. There has been little case law but it is conceivable that particular claims in specific shrink or click agreements would be rejected by an Australian court, for example because they were onerous or because the consumer did not consent to a transaction. Potential issues are highlighted below.

Overall, principles for those seeking to defend a wrap licence include -

• providing terms & conditions that encompass standard contract terms such as warranties, limitation of liability and appropriate law
• ensuring that the consumer (potential purchaser or visitor) is be made aware as early as possible that any transaction is subject to the terms & conditions of the agreement
• prominent display of those terms & conditions in a clear concise way to enable identification and understanding by an average person
• requiring the consumer to expressly accept/reject the terms by clicking a button marked 'I agree' (or suchlike) on the basis that the consumer has had access to the terms and is aware that the agreement relates to those terms
• preventing further action in relation to the transaction if the consumer does not accept the terms and conditions

Clickwrap does not offer vendors a blank cheque. In June 2007 for example in Bragg v. Linden Research a US federal court in Pennsylvania ruled that an arbitration clause in Second Life's terms of service was unconscionable, buried in the clickwrap and so one-sided as to leave the plaintiff without an effective legal remedy.

In 2010 UK retailer GameStation mockingly added an "immortal soul clause" to online contracts, subsequently gaining publicitly when it claimed that it "legally owns the souls of thousands of online shoppers". The clause read -

By placing an order via this Web site on the first day of the fourth month of the year 2010 Anno Domini, you agree to grant Us a non transferable option to claim, for now and for ever more, your immortal soul. Should We wish to exercise this option, you agree to surrender your immortal soul, and any claim you may have on it, within 5 (five) working days of receiving written notification from gamesation.co.uk or one of its duly authorised minions.

The contract noted that -

we reserve the right to serve such notice in 6 (six) foot high letters of fire, however we can accept no liability for any loss or damage caused by such an act. If you a) do not believe you have an immortal soul, b) have already given it to another party, or c) do not wish to grant Us such a license, please click the link below to nullify this sub-clause and proceed with your transaction.

The provisions of the contract are, of course, not enforceable in a court of law. GameStation claimed that the exercise demonstrated that 88% of people do not read terms & conditions; another interpretation is that many consumers believe that they are damned whatever they read.

     studies

Clickwrap and shrinkwrap are explored in major works on licencing and are touched on in primers regarding electronic commerce. For Australia two accessible introductions are Adrian McCullagh's Legal Aspects of Electronic Contracts and Digital Signatures' in Going Digital: Legal Issues for Electronic Commerce, Multimedia and the Internet ( St Leonards: Prospect Media 1998) and Jay Forder & Patrick Quirk's Electronic Commerce & the Law (Milton: Wiley 2001)

For the US regime see David Case's 2002 'Common Mistakes Made by Licensors in Administering Clickwrap Agreements' in 19 Computer & Internet Law 16, Jennifer Hill's 2003 paper 'The Future of Electronic Contracts in International Sales: Gaps and Natural Remedies under the United Nations Convention on Contracts for the International Sale of Goods' in 2 Northwestern Journal of Technology & Intellectual Property Law 1, Sean Crotty's 2002 'The How and Why of Shrinkwrap License Validation Under the Uniform Computer Information Transactions Act' in 33 Rutgers Law Journal 745, Garry Founds' 1999 'Shrinkwrap and Clickwrap Agreements: 2B or Not 2B' in 52 Federal Communications Law Journal, Julie Cohen's 1997 'Contract Law - Shrinkwrap Licenses - Seventh Circuit Holds That Shrinkwrap Licenses Are Enforceable. - ProCD, Inc. v. Zeidenberg' in 110 Harvard Law Review 1946 and Batya Goodman's 1999 'Honey, I Shrink-Wrapped the Consumer: The Shrink-Wrap Agreement as an Adhesion Contract' in 21 Cardozo Law Review 319. A point of entry into the Canadian literature is provided by Vincent Gautrais' 2004 'The Colour of E-consent' in University of Ottawa Law & Technology Journal (PDF)

Works of particular interest regarding intellectual property EULAs are highlighted here.

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