Are Clickwrap Agreements Legally Binding?
By Hal Marcus, Global Legal Evangelist, DocuSign
If you have accepted terms and conditions online, you’ve likely done so using a clickwrap agreement. Clickwrap is a simple method for indicating agreement to a set of terms, by clicking on “I Agree” or a similar process. Clickwraps are commonly used when customers sign up for social media services, software applications and wireless services, as well as any time customers are required to accept terms of service. When properly implemented and maintained, clickwrap can be a highly effective legal agreement methodology, particularly for online transactions and applications.
So what exactly is a clickwrap agreement? What makes it legal and enforceable? And when is it appropriate to use?
Clickwrap legality stems from foundational e-signature law
A clickwrap agreement, like other types of electronic signatures, generally holds the same legal effect as a “wet” signature under US law. Strong support for the enforceability of clickwrap agreements in the US is found in the Uniform Electronic Transactions Act (“UETA”) of 1999—adopted by most states—and the federal Electronic Signatures in Global and National Commerce Act (“ESIGN”) of 2000.
Many international jurisdictions similarly support the enforceability of clickwrap agreements for a range of use cases (with the caveat that the e-signature laws of some countries are more likely than their US counterparts to establish preferences for particular kinds of electronic signatures for particular use cases).
Clickwrap agreements must meet the same standards as other legal agreements
Beyond any question of the equivalency of an electronic signature to a wet ink signature, an agreement generated via clickwrap must naturally also comply with the basic legal principles of contract formation.
Among other considerations, a “meeting of the minds” must be seen—i.e., that the parties intended to be bound by the terms being enforced. This can be particularly important for the “take-it-or-leave-it” agreements commonly used in online contracting, where a customer is asked to agree to terms that are non-negotiable.
As but one example, collecting online consent to non-negotiable privacy policies has become a popular use case for clickwrap to help achieve compliance with privacy laws—including the California Consumer Privacy Act (CCPA) and its European predecessor, the General Data Protection Regulation (GDPR).
Though these types of online agreements can be excellent use cases for clickwrap, organizations should implement their agreement process with a careful eye toward enforceability.
To ensure enforceability, be clear in intent and execution
Courts may apply heavy scrutiny to clickwrap agreement processes in determining whether to enforce agreed-upon terms.
For example, they may focus on whether the colors, font sizes, use of capitalization, and other formatting encourage or dissuade action by the signer. They may look at the labeling of a button (e.g., “continue” or “next” instead of a clear “I Agree”) and analyze whether it might suggest to the reasonable internet user that, by clicking, they are actually doing something other than giving consent.
It’s also important to maintain effective records of clickwrap agreements. Even where an otherwise effective clickwrap process is used, the value of such a process may be moot unless sufficient evidence of each agreement is well-maintained for use in any resulting legal proceeding. Organizations should have ready and secure access to a complete, verifiable “audit trail” documenting the details and terms of each and every clickwrap agreement.
Choose the right type of electronic signature for your use case
When determining whether to implement clickwrap versus other types of electronic signature methodologies, organizations should consider the complexity of the use case and agreement terms.
For example, an agreement requiring multiple signers, representing a large financial value, involving a high possibility of fraud, requiring routing, or triggering certain legal or regulatory requirements should warrant an e-signature process with more advanced workflow capabilities.
However, these exclusions are limited and do not impact various use cases for clickwrap agreement, including common ones like Terms of Service, End User License Agreements, privacy policies and customer disclosures. For the right use case, an appropriately configured clickwrap solution can result in a valid, binding, admissible and enforceable agreement.
And with DocuSign Click, that’s easier than ever to do. With DocuSign Click, organizations can capture and manage customer consent to standard terms using simple clickwrap agreement methodology. And DocuSign Click maintains an evidentiary audit trail just like DocuSign eSignature, to support legal enforceability across the board.
Learn more about best practices to ensure enforceability of your clickwrap agreements. Download DocuSign’s white paper: “The Effectiveness of Clickwrap for Legally Enforceable Agreements” by Margo H. K. Tank and David Whitaker of DLA Piper.