Clickwrap Agreement

What is a Clickwrap Agreement?

A clickwrap agreement is a type of digital contract that users agree to by clicking a button or checking a box that indicates their acceptance or verification, such as an “I Agree to the Terms and Conditions” checkbox before downloading software, making a purchase, or creating an online account.

You see clickwrap agreements in several places:

• Sign-up and registration flows
• Login pages
• Downloadable forms
• Ecommerce checkout funnels
• Software installation prompts
• In-app purchase screens
• First touchpoints on sensitive websites
• Disclosures and disclaimers
• Health and safety notices

They normally appear right below information fields, like an email and password or credit card details, and above a “Continue” or “Finish” button.

Normally, they look something like this:

• [ ] I agree to the Terms and Conditions
• [ ] I accept the Privacy Policy
• [ ] I confirm that I am at least 18 years old

As far as the law is concerned, in this type of contractual agreement, you’re replacing your electronic signature with the act of clicking.

Synonyms

• Click-through agreement
• Clickwrap contract
• Electronic contract

Importance of Clickwrap Agreements in Online Transactions

Perhaps it goes without saying, but “acceptance” is one of the most important stages of contract management.

A clickwrap agreement differs from your typical legal contract because users don’t have to physically sign it. They simply have to click a button or check a box. This makes it easier and more convenient for both parties involved in the agreement, as it eliminates the need for printing, signing, and scanning physical documents (or clicking through a guided digital signature process).

For businesses, clickwrap agreements also serve as a way to protect themselves against legal disputes and ensure users are aware of their terms/privacy policy without having to bury them in pages of dense legal terminology. Since contracts are long and intricate, requiring a standard e-signature would dramatically worsen the user experience and, by extension, web conversions.

It’s also a more effective way to track user acceptance. Since actions are comprised of simple, timestamped clickstream data and an audit trail, it’s easy to prove a user accepted an agreement.

Clickwrap Agreement Legal Enforceability

Since checking the box or clicking the button is your digital way of stating, “I’ve read the actual contract, and I accept its terms,” clickwrap agreements are legally binding. The Uniform Electronic Transactions Act (UETA) and Electronic Signatures in Global and National Commerce Act (ESIGN) affirm the legal status of electronic signatures and records.

While these laws are predominantly discussed in regard to signing digital contracts, their provisions also apply to clickwrap agreements. In fact, UETA explicitly states that “the standard webpage click-through process” falls under this category.

Of course, contractual terms are still only enforceable provided they meet certain criteria for user consent and notice.

As far as UETA and ESIGN are concerned, there are four major requirements:

Intent to Sign

Just like traditional wet ink signatures, electronic ones are only valid if each contracting party intends to sign. The agreement can be voided if the signee is forced, tricked, or otherwise misled into agreeing to terms without actually knowing what they’re consenting to.

In the case of clickwrap agreements, the physical act of clicking or checking a box and the inclusion of clear language (e.g., “By clicking this box, you agree to ___”) satisfies this requirement.

Consent to Conduct Business Electronically

In online agreements, each party has to consent to doing business electronically. This is also quite straightforward (as the contractor, you can establish consent by including it in the agreement).

If the contract is taken to court to prove unenforceability, the claimant would need to provide evidence this consent wasn’t there. As a business, this requires an analysis of the interaction’s circumstances.

For consumers, there are special considerations. You can use electronic records in consumer transactions only when they’ve:

• Affirmed they agree to use electronic transaction records
• Kept this consent through the execution process
• Accepted UETA’s Consumer Consent Disclosures
• Clicked a box or button with clear labeling
• Had the option to read through the agreement

If your clickwrap agreement is brought up in court, they’ll look at a screenshot of the screen’s interface at the time of agreeing. If your page design is clunky or confusing, the judge may decide that there was an inadequate display of assent. On the other hand, courts almost always rule in favor of businesses if they have an optimally designed page.

Association of Signature with the Record

To meet the requirements of the ESIGN Act and UETA, a record that accurately reflects the signature creation process has to accompany each clickwrap agreement. In other words, an audit trail must be available to back the record’s validity.

Alternatively, a textual or graphic statement can be generated and added to the accepted agreement to demonstrate that it was executed with a click-through process.

Record Retention

Back-end records contain all the data your system captured at the time a user accepted your agreement. U.S. laws on e-signatures and electronic transactions require data to be able to be stored and accurately reproduced for reference by authorized parties.

Data points include:

• Who accepted the agreement
• When they did so
• Which version was live at the time
• The agreement’s contents
• How they were presented with it
• Screenshots
• Version history

Keeping all this information in a repository (i.e., a database) is also crucial because online agreements are sometimes used as evidence to compel arbitration to protect you from disputes. In these cases, records are most successful when they specifically track a user’s acceptance of the agreement.

Clickwrap Agreement Challenges and Solutions

Any time you verify consent without looking at the signer, it can be tricky to ensure you’ve obtained their informed consent.

Although the click is a direct user action and is enough to demonstrate the agreement, there are additional considerations, like how you obtain the click and whether your users believe you’re treating them ethically.

Dynamic Regulatory Compliance

Ensuring clickwrap agreements comply with a plethora of ever-changing regulations across different jurisdictions is incredibly difficult, especially for smaller companies without dedicated legal teams. And the challenge is amplified for businesses operating globally, where legal requirements vary from country to country.

To address this, companies can incorporate adaptable clauses within their agreements that allow for easy updates in response to regulatory changes and use contract versioning to track and store these adjustments.

User Experience vs. Legal Necessity

Striking a balance between a seamless user experience and the legal necessity of obtaining informed consent can be tricky. Overly intrusive clickwrap mechanisms may deter users, while ones that are too subtle or don’t include the right clickable elements (e.g., a link to the binding agreement) won’t meet legal scrutiny.

The solution normally involves designing user-friendly clickwraps that are both noticeable and unobtrusive, perhaps through the use of clear, concise language and interactive elements like pop-ups or highlighted consent buttons​​​​. To make them clearly visible, it’s best to place them below required information fields, but above the final continue/submit button.

Informed Consent for Updates and Amendments

According to data from DocuSign, half of all organizations update their agreements 2-3x per year. Few of these are able to secure the consent of the acceptees for such changes, leaving them vulnerable to significant legal risks. The communication of updates or amendments to clickwrap agreements, particularly when it involves substantial changes like the addition of an arbitration clause, is especially complex.

A potential solution is to implement a more interactive notification process. By sending an email and triggering an in-app popup that prompts users to navigate to the updated agreement (and re-click to affirm consent), you can ensure they’ve consented. Since emails can go unnoticed, you should make their response mandatory to continue using their accounts.

Enforceability Concerns with Minors and Non-Competent Individuals

For age-restricted sites and services, a clickwrap agreement can sometimes be practically useless. Minors and non-competent individuals don’t have the legal capacity to provide informed consent. As such, they cannot enter into legally binding contracts.

Even if the agreement protects the company from liability issues, it doesn’t prevent what’s arguably the real problem — access to content or services not intended for them.

A possible solution would be to integrate additional verification mechanisms (e.g., age-gating, opt-ins, digital ID verification, or reCAPTCHA) that would require the user to provide verifiable consent and demonstrate that they understand the terms of the agreement before proceeding.

Best Practices for Implementing Clickwrap Agreements

Know when and when not to use a clickwrap agreement.

As a general rule of thumb, clickwrap agreements are best suited to standardized contracts. In a standardized contract, language doesn’t vary much (if at all) from person to person. They can handle high volumes of acceptance and repeat the same process over and over.

Standardized agreements broadly apply to the signer, whoever they may be. For example:

• Non-disclosure agreements (NDAs)
• Terms of service
• Privacy policies
• End-user license agreements

Click-through agreements work especially well when a standardized contract fits into another workflow, like customer onboarding, a checkout funnel, or an account creation process.

By comparison, complex contracts are processed at lower volumes. They’re personalized — someone from your team tailors each one to a specific deal or signer. And you can’t reuse them for different partners or customers, even if there are some standardized or templated elements.

As an example, M&A deals, long-term channel sales partnerships, and enterprise sales contracts wouldn’t be a good fit for clickwrap agreements.

ALWAYS include a clear link to the agreement in question.

Forgetting or neglecting to include clear access to the actual agreement is the fastest way to invalidate your clickwrap method.

Take Barnes & Noble as an example. In a 2014 case, the bookseller placed a link to their terms of use at the bottom of every webpage, implying that, by using the site, users agreed to these terms.

But, since the link was not prominently displayed or accompanied by a requirement for explicit user consent, the court ruled users were not adequately notified of the terms, rendering the implied consent ineffective.

There’s an easy fix to this: add a hyperlink to the full agreement, either as a button or right next to the “I agree” checkbox.

For example:

• [ ] By checking this box, you are agreeing to our Terms of Service and Privacy Policy.

Make your design user-friendly.

In the aforementioned DocuSign study of 300+ decision-makers, 83% say they’ve had to deal with legal disputes as a result of poor clickwrap agreement practices. Every single one ranged from $50,000 to over $5 million.

While some of these disputes resulted from a lack of consent to amendments or updates, most were due to design aspects.

As far as screen design goes, here are our high-level recommendations:

• Keep the screen layout free of clutter (use plenty of white space).
• Use accessible, web-safe fonts in a color that contrasts with the background.
• Make the font size big enough to be readable on any device.
• Keep the entire screen visible without a scroll.
• Don’t pre-check the checkbox.
• Be clear and direct about the consent they’re giving.

Your hyperlink should obviously be a hyperlink (blue and underlined). Embed the agreement into a scroll pane so it appears directly on the screen when users click it. To ensure they’re aware of the terms, we recommend requiring them to click your hyperlink to open it before proceeding.

Require user consent every time you update your contract.

You wouldn’t change the terms of a contract after the other party gave you a signature (well…you can’t). But that’s exactly what you’re doing when you update an online agreement without telling your current users.

Once you make an update, the agreement is no longer legally enforceable unless you receive consent again. You could send a prompt via email, but it’s better to do so in-app or once a user logs into their account.

Either way, notify every user and lock access to their account or the features until they reaffirm their consent. That way, you don’t have to worry about anyone using your products, services, or resources without agreeing to the terms for doing so.

Present your clickwrap agreement appropriately.

There are a few different ways you can present a clickwrap agreement, and how you incorporate yours into your page’s UI will depend on the platform you’re using and the nature of the content surrounding it.

Some platforms, namely banking websites and apps, integrate the entire agreement text directly on the page. Users are required to scroll through the entire document before they can proceed, ensuring they cannot later claim they were unaware of specific terms they agreed to.

Certain clickwrap agreements — especially in leasing — ask for the signer’s active consent (like checking a box or initialing) at the end of multiple contract sections. You might do this to emphasize important clauses that affect the signer directly (e.g., for a safety reason or to highlight what happens in case of a breach).

Most social networking platforms and apps use a single action — such as account creation or ticking a checkbox —to indicate a user’s agreement to multiple terms simultaneously. The terms are typically linked and hosted on a separate page. This is the most common type of clickwrap agreement.

Keep accurate records of every clickwrap agreement.

Being able to prove your agreements were properly executed is critical to enforcing them. Using contract management software to keep them in a contract repository is your best bet.

Keep the following data from each agreement:

• Basic identifying information — signer name, date, time, and version
• The OS and browser they were running at the time
• Whether they clicked open the contract
• Details regarding the agreement’s presentation at the time of signature
• Screenshots showing what the screen looked like
• Back-end records of how the signer used your site/platform
• Authentication proving the signer’s identity

All this information will prove helpful in evaluating a case for fraud, breaches of contract, and enforceability.

Industry-Specific Considerations

Ecommerce

Besides the standard best practices described above, there are a few things to keep in mind when dealing directly with consumers shopping an online store.

If you’re selling age-restricted products like alcohol or tobacco, in addition to having a proper clickwrap agreement in place, you need to perform an age verification check. Otherwise, you could face costly lawsuits and fines for selling restricted products to minors.

Furthermore, if your site allows user-generated content (UGC), make sure your clickwrap agreement includes clauses that:

• Prohibit users from posting illegal or inappropriate content
• Grant you rights to the user’s content
• Indicate how you intend to use that information and whether it’s publicly available
• Outline copyright infringement consequences and how you’ll handle reported content

This protects your company from potential lawsuits or requests for takedown of user-generated content. Additionally, make sure you have a mechanism in place for handling copyright infringement claims related to UGC.

Software Licensing

For licensors, the primary concern in software licensing is protecting and controlling intellectual property rights within the software. Ensuring the clickwrap agreement clearly delineates the scope of the license, including any restrictions on the use of the software, is paramount.

The problem for software companies is, they generally update their software quite frequently. So, they regular need to update their terms to reflect changes in the software, its use, and relevant laws​. That makes them particularly difficult to monitor and deploy effectively.

Software piracy is another prevalent issue. Without a proper contract in place, it can be challenging to enforce legal action against individuals or businesses using your software without proper licensing.

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