Proact – ‘Browse-Wrap’, ‘Click-Wrap’ and ‘Sign-In’ articles

PROACT –  ‘BROWSE-WRAP’, ‘CLICK-WRAP’ AND ‘SIGN-IN WRAP’ CONTRACTS

Online contracts take many forms.

The most common forms are ‘Click-wrap’, ‘Browse-wrap’ and ‘Sign-in wrap’ contracts.

In this article we take a quick look at each of these contracts.  We also look at some instructive guidance from courts in the United States that have ruled on disputes concerning these contracts. 

As you’ll see the key issue, across all of these contracts and for you to bear in mind when finalising your online contracts, is whether the contract is enforceable. 

It is a question which always turns on the extent to which the contract’s terms are accessible to (and by) the user, and whether the user is aware of them and has agreed to be bound by them.

BROWSE-WRAP

A Browse-wrap contract is a contract which users can ‘browse’ without having to provide any formal acknowledgement of having read, or agreeing to be bound by, the contract’s terms.  

With these types of contract, a hyperlink will typically redirect a user to a separate page which contains the contract’s terms – the terms themselves will usually state that the user agrees to be bound by the terms, simply through its access of (or navigation through) the website, app or other online platform (“Platform”).  

While there is limited case-law in New Zealand on Browse-wrap contracts (and, for that matter, Click-wrap and Sign-in wrap contracts), courts in the United States have held that a Browse-wrap contract is unenforceable unless its terms are clearly notified to the user and the user is clearly notified of the fact that the user’s access of the Platform is deemed agreement of the contract’s terms.  For example:

  • In Specht v Netscape Communications Corp, the court indicated that the mere request that a user should read the terms and conditions is not indicative of acceptance of the terms.  Instead, the terms must be “conspicuous” and the user must understand, quite clearly, that he or she is accepting the terms when clicking the “download” button.
  • In Re Zapos.com, Inc, the court stated a “a party cannot assent to terms of which it has no knowledge or constructive notice, and a highly inconspicuous hyperlink buried among a sea of links does not provide such notice”. 

CLICK-WRAP

Unlike a Browse-wrap contract, a Click-wrap contract is one in which the user is required to actively accept or agree to be bound by the contract’s terms.  

A Click-wrap contract will typically do this by requiring the user to tick a ‘checkbox’.

In some cases, businesses will include a narration alongside the checkbox to make it clear to the user what the implications of ticking the checkbox are (for example “by clicking the following button you agree to…”).

Click-wrap contracts may still raise issues around enforceability.  If, for example, a contract involves a complicated acceptance procedure or its terms are complicated and protracted, or simply unclear, the contract may itself be held to be unenforceable.  

In Sgouros v TransUnion Corporation, the Click-wrap contract was held to be unenforceable because the court found that the website’s layout and language did not provide its users with reasonable notice that their “click” to enter the website was acceptance of the website’s terms and conditions.   

SIGN-IN WRAP

A Sign-in wrap contract falls somewhere in between a Browse-wrap contract and a Click-wrap contract.  

This type of contract usually combines the user’s agreement to the terms with the sign-up process for the Platform.  For example, many Sign-in wrap contracts contain language to the effect that by registering for or signing into, an account, users agree to the terms (to which the users are able to navigate from the relevant “sign-in” screen). 

With Sign-in wrap contracts, there will usually be no requirement for the user to tick a checkbox.  

Also, the user will typically be notified of the existence of the contract’s terms, with a button or link, but it will not usually be necessary for the user to view the terms in order to use the Platform. 

In Berkson v. Gogo LLC, Judge Weinstein outlined an instructive 4-part test to help determine whether a Sign-in wrap contract is enforceable or not: 

  • Is there “substantial evidence” that the user understood that he/she was agreeing to actual terms and conditions?;
  • Were the terms of use clearly available to the user?;
  • How was the user’s agreement obtained?; and
  • Did the contract draw material terms to the user’s attention?

This is a just a snapshot of some of the many forms of online contracts and the issues relating to them. 

If you need help or guidance with your online contracts, please contact us.

The above overview has been provided for general information purposes only.  It is not, nor is it intended to be treated as, legal advice and is subject to change without notice.

About the Authors

Andrew Comer

Partner

I am a Partner in the Corporate / Commercial team at Stace Hammond. I regularly advise a broad range of domestic and international clients on...

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Andrew Comer

Olga Garin

Solicitor

I was born in Russia and speak fluent Russian.  My clients appreciate my international viewpoint and I can bring that to bear in working with...

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Olga Garin