This article is written by Nidhi Dahiya, pursuing Diploma in Advanced Contract Drafting, Negotiation and Dispute Resolution from LawSikho.com.
Table of Contents
Introduction
The phrase “I agree to the terms & conditions” is very familiar and most often agreed upon by every digital media user in day to day work. However diminutive it may seem to a lay man, these actions are of utmost importance as they lead to a valid and enforceable contract and those terms, which are rarely and scarcely bothered, can be strictly enforced against the user.
A clickwrap or clickthrough agreement is a digital prompt, that hastens the consent process by providing users the opportunity to expeditiously accept or decline a digital media policy. The privacy policies, terms of services, copyright policies and other user policies are commonly enlisted in the “clickwrap prompt”. Being a convenient and effective way to enter into an agreement with both the consumers and commercial customers, the click wrap technology experienced a phenomenal increase in its applicability and usage.
A clickwrap agreement is shown in the figure with a check box subsuming all the privacy policies, terms of services, copyright policies and other user policies, which are sometimes rambling pieces of writings for an amateur. They mostly show:
- A checkbox or button
- A notice to agree with the terms & conditions
Why is a clickwrap agreement important?
Clickwrap agreements are an added amenity to the companies in many ways:
- Prompt and smooth customer assistance.
- Clickwrap agreements are very conspicuous- even obvious to ensure that its subscribers are well aware of all legal papers at the time of purchase by clearly stating the privacy policies, terms of services, copyright policies and other user policies to avoid claims that the user “didn’t see” the agreement terms.
- It provides a copious opportunity to read the agreement by providing easy-to-spot links for all the privacy policies, terms of services, copyright policies and other user policies.
- To avoid potential legal or privacy disputes by assuring the mandatory acceptance of all legal agreements for all the users who are using the service.
- Keeps a record of consent and terms which the customer agreed upon and acceptance of terms for transactions and purchase etc.
Structure and Legality of Clickwrap agreement
The most important and essential component of a Clickwrap agreement is “NOTICE”, which invokes the swiftness to accept and comprehend the legal terms, by enhancing the probability of making the user comply with the agreement. All the terms and conditions in the privacy policies, terms of services, copyright policies and other user policies set out by the company are enforceable as they are based on the consent of the user and on the aforesaid terms in various agreements which the user agreed upon.
Any agreement to be enforceable mainly depends on three factors:
- Notice (whether the user is apprised of the terms)
- Consent (whether the user agreed to the terms)
- Fairness (whether the agreement was fair)
The effectiveness of a Clickwrap agreement process depends on structure of the agreements which includes following features:
- Non porous:
There should be no other way to get the access to the product or service without clicking the “I Agree” button.
- Clear call to action:
The “I Agree” checkbox for acceptance or denial should not be vague and must display the customer a statement clearly informing the customer that this is an enforceable contract and a binding on him for his action.
- User certification:
This consent of the customer by clicking on “I Agree” is a certification form the user that the terms has been read and acknowledged by the customer.
- Highly visible terms:
The terms of the should be clear with a readable font and free from any distraction in the terms of visibility to the user.
- Available terms:
All the terms of the contract should be available to the customers including the hyperlinks used should be properly labelled and the terms being printable and downloadable to the customer to review them before acceptance.
- Enforceable terms:
All the legalities must be comprehensible to the customer and the terms in the contract should be in accordance with law. The provisions like arbitration clause, warranty, liability etc. laid out in the contract in a way to express the enforceability of the contract and should be accessible to the customer.
- Retained terms:
A record of agreed terms of customer/ transcripts/ other agreed files should be retained for future use with the customer and with the company.
- Compatible and consistent:
The agreement should be rational and persistent irrespective of the platform, type of the operating system and the device (mobile, desktop, laptop etc.), used by the customer.
- Customer authentication:
The authentic user details like a secure email address are must for any user before entering into any such agreement, for future purpose.
- Evidence of agreement:
The evidence of the terms agreed and the steps followed by the customers in any process which involves clickwrap agreement need to be retained by the company for any legal proceeding due to any dispute.
Examples of clickwrap agreement
Long v. Provide Commerce, Inc. (2016)
The company runs a flower business and provides online services too. The plaintiff purchased a flower arrangement from the defendant website Proflowers.com, which was advertised on their website as “completed assembled kit”. The flowers were delivered to the plaintiff as a “do-it yourself” kit in a box requiring assembly by the recipient.
The plaintiff claimed that Provide Commerce, Inc. defrauded him and sued the defendant company, alleging that the company’s terms and conditions were not easily accessible and were not provided with a chance to go through the terms, albeit the plaintiff placed a purchase order from the site.
The decision of the court was in favour of the plaintiff, and with sufficient reason of the accessibility issues of terms and design of the hyperlinks and website.
Lan Systems v. Netscout Service Level (2002)
In this case, Lan system (the plaintiff) sued the Netscout on the breach of the contract and volition of certain consumer rights. Both of them signed a detailed Value-Added Reseller agreement (VAR). The plaintiff agreed to resell the Netscout software to the customers. There were three contracts signed – among them the purchase order, VAR agreement and the clickwrap agreement were worded in such a manner that could give effect and may affect the dispute among them differently.
But the judgement was in favour of the defendant as according to the judge, both the VAR and the purchase order were silent and the clickwrap agreement prevailed. the -as the terms and conditions was clearly mentioned that the reseller could not rent out its software.
Use of Clickwrap agreement
Clickwrap agreement are usually seen where the user has:
- to create a user account on any website
- to log in to an online bank account
- to download content
- to finish an online transaction
Case history in India
Many international organisations like United Nation Commission on International Trade Law (UNCITRAL) and Conventions on Contract for International Sales of Goods (CISG) have validated such online contracts. The Uniform Computer Information Act (UCITA) also validates such online contracts by legitimizing the contracts. So, based on these framed laws the legal situation of the online contracts in other countries like the U.S, European nations, U.K etc. is pretty clear in comparison to India.
The Hotmail Corporation vs. Van $ Money Pie Inc. is another important case and among the firsts that ratified the validity of the clickwrap agreement in its judicial interpretation. The plaintiff (Hotmail) has alleged that the terms of the agreement were violated by the customer as the messages and e-mails were altered. The plaintiff accused the defendant of violating Computer Fraud and Abuse Act, breach of contract, fraud, misrepresentation and trespass of chattel. The enforceability of clickwrap agreement depends on the terms and conditions when it comes to understanding the judicial interpretation of the click-wrap agreements.
The decision was ruled in favour of the plaintiff as the terms and conditions of the click wrap agreement were violated.
In India, there are no specific principles to deal with the online contracts directly, however these are dealt with in reference to traditional contract laws i.e. Section 10 of Indian Contract Act, 1872 as the consumers are bound to follow the consequences after manifesting the consent. The contracts in India whether performed electronically or digitally are considered legally valid or invalid on the basis of the provisions of various statutes such as the Indian Evidence Act, 1872, Indian Penal Code, 1860, the Reserve Bank of India Act, 1934 and the Bankers Books Evidence Act, 1891 to make them compliant with the online contract by the IT Act, 2000. The IT Act, 2000 has been framed by the Indian Parliament to include within its ambit such online contracts. This act is based on UNCITRAL’s Model Law on Electronic Commerce, 1996 to deal with the online contracts.
In a judgment given by the Income Tax Tribunal in 2017, in the case of Ddit (It) 3(1), Mumbai vs Gujrat Pipavav Port Ltd., the clickwrap agreement was used as the reference to deal with the infringement of the copyrights. This showed the legal position of the clickwrap agreement in the judgement.
In the case of Trimex International FZE vs. Vedanta Aluminium Limited, India, 2010, Trimex International FZE is registered in Dubai and runs a mineral trading business and Vedanta Aluminium Limited, is the supplier and dealer of the aluminium ores. Vedanta Aluminium agreed on the supply of Bauxite to the petitioner and both the parties agreed to sign the contract via emails. Due to some dispute between the parties the respondent refused to enter into any judicial proceeding claiming there is no fully accomplished contract in between them.
The Supreme Court made it clear that any contract discussed over email will be valid and hence an enforceable contract.
Conclusion
In India, The Information Technology (IT) Act, 2000 along with the amendments brought about by the The IT (amendment) Act, 2008 is not sufficient to deal with contracts like Clickwrap or other online contracts. There is the requirement of uniform regulations, precisely dealing with online contracts to preserve consumers benefits. The dynamic process implicated in online contracts and engagements of the technical perils; it is required to lay out specific rules to deal with these online contracts.
With the increasing use of the click wrap contracts in day to day business from a global perspective, it has been observed that the laws governing the e-contracts are ambiguous. The click wrap agreement being lengthy and executed on a daily basis in various dealings like opening of a bank accounts, a software installation, opening an account on any social networking site etc., before accepting the terms and conditions, it is important for the customer or user to read the terms of the clickwrap agreement. As after consent, and clicking on the “I AGREE” button that contract is enforceable and is legally binding to the acceptor.
When it comes to getting users to agree or give consent for the things like cookies use of communication or the terms and conditions in the privacy policies, terms of services, copyright policies and other user policies, the clickwrap agreement is very essential from a legal perspective. To get an informed consent by using the active clickwrap method, it is essential to set out a comprehensible policy.
References
- http://termsfeed.com/blog/3-key-legal-cases-on-click-wrap/
- http://indiakanoon.org/doc/668803/
- http://blogipleader.in/legal-validiyt-of-click-wrap-and-shrink-wrap-agreement/
- https://www.docusign.com/sites/default/files/Click-Legality-Whitepaper-US.pdf
- https://blogs.adobe.com/acrolaw/2009/11/creating_a_click-thru_agreement/
- https://www.upcounsel.com/clickwrap
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