Click Wrap Agreements - What are they and are they enforceable?

What can this pop-up box mean?


When purchasing a product online or downloading a program or piece of software, who has ever read the numerous pages of terms and conditions written in a print barely legible that pops up on the screen in a little box? Is the content ignored and simply accepted because most people cannot be bothered reading pages and pages of cryptic legal terms and phrases, let alone decipher what's in the box, or do people doubt the legality of such "contracts"? What exactly are such agreements and are they even enforceable?


What are they?


Originating from the equivalent 'shrink wrap contracts', often used in boxed software purchases whereby the act of tearing open the plastic wrap amounts to an acceptance of the terms enclosed within, click-wrap agreements are a similar form of terms and conditions in relation to transactions over the internet. Rather than tearing open the shrinkwrap, the enforceability of click-wraps are through the simple act of clicking "accept", without any need for a signature and without an opportunity to change or amend the conditions.

Commonly used in connection with software licences, the purpose of such agreements is aimed at alerting the user that the software is protected by copyright and other Intellectual Property Laws and Treaties. Although copyrighted work is already covered under copyright law, there exist areas that are nevertheless, unprotected. Thus, click and shrink-wrap agreements can be used to fill in the blanks through the following ways:

  • to disclaim implied warranties, remedies and liabilities;
  • to specify the governing law and forum;
  • to protect non-copyrighted material;
  • and to impose other limitations.

Are they enforceable?


Whether such forms of agreements are enforceable has raised much controversy worldwide. Their legal status is still somewhat unclear, the issue of their validity has received more attention in the United States than here in Australia, however, the common thread of consensus favours click-wrap over shrink-wrap agreements. The reasons for this relate to the method of acceptance. As stated, the acceptance of shrink-wrap agreements is by ripping the plastic wrapping used to wrap software boxes in order to get to the Terms and Condition enclosed within. The user, however, without having the opportunity to first read the terms, has already 'accepted'. Click-wrap agreements on the other hand, are more likely to be accepted and enforceable as the user can first review the conditions prior to clicking 'accept'. Several US cases have indicated that shrink-wrap agreements are unenforceable and point towards their enforceable counterparts, click-wrap agreements. There is yet to be a case in Australia that has dealt with this particular matter. It is, however arguable that if this issue appears before an Australian court, the reasoning of the US decisions will be heavily drawn upon, certainly having an impact on the court's reasoning process.

Although such agreements are most commonly used in connection with software licences, nowadays they have come to be implemented in almost any transaction online, whether it be buying an item on Ebay or simply downloading iTunes. Simply by using the internet, everyone would have come across one at some point and undoubtedly clicked 'accept' without ever reading a single clause.

So next time a box pops up with pages of conditions in a print too small to read, refrain from scrolling down to the bottom of the page and choosing the 'accept' option immediately. Instead, you should probably read the clauses to see what you could potentially be accountable for.

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