Click Wrap Agreements Are Generally Enforceable
Charles Carreon
You might wonder whether an agreement that very few people ever read, like a Microsoft licensing agreement, or an AOL subscription agreement, could really be fully enforceable. There used to be questions about this topic, with law professors wondering whether an electronic agreement could be considered “written,” and whether a “click here” could substitute for a signature. These questions are quickly disappearing. Both AOL and Microsoft have now enforced provisions of their click wrap agreements many times
Since the big boys have paved the way, let's move on to make sure your online agreements are enforceable. Following these instructions will give you the best shot at enforcing your own click wrap agreements, which as you will see, give you the opportunity to control some of the most important issues that will arise in the event your website starts to spawn litigation. Recent judicial decisions establish that, using a click wrap agreement, you can (1) require disputes to be arbitrated, rather than tried in court, (2) compel the other party to arbitrate on your turf through a forum selection clause, and (3) prevent consumer claims that would otherwise be aggregated into class actions to be dealt with one by one through arbitration.
First, let's deal with the objection that an agreement might not be “written” because it only appears on the computer screen by inserting this language into your agreement:
MEMBER UNDERSTANDS AND AGREES THAT THIS DOCUMENT IS A “WRITING” AS DEFINED BY LAW. MEMBER ACKNOWLEDGES HAVING THE CAPACITY TO PRINT OUT THIS AGREEMENT AND STORE THE SAME FOR RECORD KEEPING PURPOSES, AND WAIVES ANY CLAIM UNDER THE STATUTE OF FRAUDS OR ANY SIMILAR STATUTE THAT WOULD BLOCK ENFORCEABILITY OR ADMISSIBILITY OF THIS AGREEMENT FOR FAILURE TO MEET THE REQUIREMENT OF A “WRITING.”
Looking at these issues from the point of view of a consumer, I strongly recommend that you print out a copy of any click-wrap agreement you enter into, read it through before you click, and keep it in a folder where you can find it when you need it. As discussed in the next paragraph, since click-wrap agreements have a tendency to “evolve,” you may not be able to discover what terms you agreed to initially simply by going back to the website, because the contract may be different now.
That's another amazing thing about click wrap agreements. Unlike most two-party agreements that are formed with paper and pen, courts have allowed websites to revise click-wrap agreements by means of a notification and waiver of objection process. What do I mean by a “notification and waiver of objection process?” For example, you insert a term like this into your click-wrap agreement: “I understand that the terms of this agreement may be revised at any time by the website operator, and agree that I will be bound by such terms if I fail to give notice of objection within 40 days of receiving notification of the change in contractual terms via email delivered to the email address elsewhere identified in this agreement.” These are used everywhere, seem to work, and unless the state law of your jurisdiction makes such a provision unenforceable, I see no reason to avoid using them, if they will serve your purposes. From the other side, as a consumer, please remember that if you are signed up with a website pursuant to click-wrap agreement, you should be sure to keep your contact information updated, because if an important notification goes to an old email address and you do not receive or read it, you will probably be bound to the new version of the agreement.
I said that you can force arbitration on your home turf. How do you do that? By using arbitration and forum selection clauses. An arbitration clause simply says that you agree to arbitrate. A forum-selection clause simply says that you agree to either litigate or arbitrate a dispute in a specified location. MSN users who sued in New Jersey were forced to take their dispute to Redmond, Washington. MSN users in Illinois got the same result. AOL has gotten both Maryland and Florida courts to send litigants to Virginia, where AOL is headquartered.
California, however, has given its citizens the power to sue AOL for consumer law violations in California. The California court gave credence to precisely the argument that the Florida court disregarded — that there is no class action litigation procedure available in the state of Virginia. Personally, I think the California rule makes a lot of sense, and will hopefully see it being a leader in this kind of litigation. Consumer lawyers and consumers should not give up, because there are many reasons why click-wrap arbitration and forum-selection clauses should be disregarded by courts, just as many other consumer-trapping legal devices have eventually been consigned to the dustbin of legal history.
Meanwhile, the law is the law, and I advise you to use it, not abuse it. As a practical matter, you have no way of concluding business agreements with website visitors except by using click-wrap agreements, unless you want to use the print-out, sign and fax-to-me method. This is cumbersome, and creates paper where there needn't be any. Additionally, it limits your market to those people who not only have a computer, but also a fax machine. As a practical matter, you will be using click-wrap agreements both to purchase and sell your products, so you should be aware of what is in them when you agree to them, and use your power to choose favorable terms within the limits of commercial fairness, when you ask others to contract with you.
You might wonder whether an agreement that very few people ever read, like a Microsoft licensing agreement, or an AOL subscription agreement, could really be fully enforceable. There used to be questions about this topic, with law professors wondering whether an electronic agreement could be considered “written,” and whether a “click here” could substitute for a signature. These questions are quickly disappearing. Both AOL and Microsoft have now enforced provisions of their click wrap agreements many times
Since the big boys have paved the way, let's move on to make sure your online agreements are enforceable. Following these instructions will give you the best shot at enforcing your own click wrap agreements, which as you will see, give you the opportunity to control some of the most important issues that will arise in the event your website starts to spawn litigation. Recent judicial decisions establish that, using a click wrap agreement, you can (1) require disputes to be arbitrated, rather than tried in court, (2) compel the other party to arbitrate on your turf through a forum selection clause, and (3) prevent consumer claims that would otherwise be aggregated into class actions to be dealt with one by one through arbitration.
First, let's deal with the objection that an agreement might not be “written” because it only appears on the computer screen by inserting this language into your agreement:
MEMBER UNDERSTANDS AND AGREES THAT THIS DOCUMENT IS A “WRITING” AS DEFINED BY LAW. MEMBER ACKNOWLEDGES HAVING THE CAPACITY TO PRINT OUT THIS AGREEMENT AND STORE THE SAME FOR RECORD KEEPING PURPOSES, AND WAIVES ANY CLAIM UNDER THE STATUTE OF FRAUDS OR ANY SIMILAR STATUTE THAT WOULD BLOCK ENFORCEABILITY OR ADMISSIBILITY OF THIS AGREEMENT FOR FAILURE TO MEET THE REQUIREMENT OF A “WRITING.”
Looking at these issues from the point of view of a consumer, I strongly recommend that you print out a copy of any click-wrap agreement you enter into, read it through before you click, and keep it in a folder where you can find it when you need it. As discussed in the next paragraph, since click-wrap agreements have a tendency to “evolve,” you may not be able to discover what terms you agreed to initially simply by going back to the website, because the contract may be different now.
That's another amazing thing about click wrap agreements. Unlike most two-party agreements that are formed with paper and pen, courts have allowed websites to revise click-wrap agreements by means of a notification and waiver of objection process. What do I mean by a “notification and waiver of objection process?” For example, you insert a term like this into your click-wrap agreement: “I understand that the terms of this agreement may be revised at any time by the website operator, and agree that I will be bound by such terms if I fail to give notice of objection within 40 days of receiving notification of the change in contractual terms via email delivered to the email address elsewhere identified in this agreement.” These are used everywhere, seem to work, and unless the state law of your jurisdiction makes such a provision unenforceable, I see no reason to avoid using them, if they will serve your purposes. From the other side, as a consumer, please remember that if you are signed up with a website pursuant to click-wrap agreement, you should be sure to keep your contact information updated, because if an important notification goes to an old email address and you do not receive or read it, you will probably be bound to the new version of the agreement.
I said that you can force arbitration on your home turf. How do you do that? By using arbitration and forum selection clauses. An arbitration clause simply says that you agree to arbitrate. A forum-selection clause simply says that you agree to either litigate or arbitrate a dispute in a specified location. MSN users who sued in New Jersey were forced to take their dispute to Redmond, Washington. MSN users in Illinois got the same result. AOL has gotten both Maryland and Florida courts to send litigants to Virginia, where AOL is headquartered.
California, however, has given its citizens the power to sue AOL for consumer law violations in California. The California court gave credence to precisely the argument that the Florida court disregarded — that there is no class action litigation procedure available in the state of Virginia. Personally, I think the California rule makes a lot of sense, and will hopefully see it being a leader in this kind of litigation. Consumer lawyers and consumers should not give up, because there are many reasons why click-wrap arbitration and forum-selection clauses should be disregarded by courts, just as many other consumer-trapping legal devices have eventually been consigned to the dustbin of legal history.
Meanwhile, the law is the law, and I advise you to use it, not abuse it. As a practical matter, you have no way of concluding business agreements with website visitors except by using click-wrap agreements, unless you want to use the print-out, sign and fax-to-me method. This is cumbersome, and creates paper where there needn't be any. Additionally, it limits your market to those people who not only have a computer, but also a fax machine. As a practical matter, you will be using click-wrap agreements both to purchase and sell your products, so you should be aware of what is in them when you agree to them, and use your power to choose favorable terms within the limits of commercial fairness, when you ask others to contract with you.