Clickwrap vs. Browsewrap vs. Sign-in-Wrap: A Guide to Online Agreements

Online agreements have become so plentiful that consumers may not realize the extent to which they are legally binding themselves simply by clicking “Accept” on a website. Certainly, litigation is not at the top of one’s mind when purchasing new shoes or services online or even when signing up to sell products for an online company, such as an MLM. But, as a litigation attorney, I know from firsthand experience that the potential is there.

In recent years, I have been involved in litigation involving the enforceability of binding arbitration clauses, jury waivers, fee-shifting provisions, damages limitations, and even noncompetition and nonsolicitation clauses in online agreements.

Why you need to know about online agreements

The legal enforceability of agreements included on websites may not be clear to many companies or their consumers. As a result, companies may face litigation over ill-advised and improperly written agreements, and the cost of enforcing such agreements may be substantially increased by ambiguous language or unclear or even contradictory terms.

For example, I recently litigated a case where the electronic purchase order contained fine print that stated that by paying the purchase price, the customer was agreeing to ALL of the “Terms and Conditions” in a hyperlink, which provided, among other things, arbitration of disputes, a fee-shifting provision, and limited warranties and returns. The case illustrated that consumers failed to click the hyperlink or otherwise read the fine print to understand the full terms of the parties’ agreement, as well as the factual subjectivity of consent that can be involved in determining the validity of such agreements.

Consumers—myself included—are often faced with accepting the terms of a non-negotiable online agreement or choosing not to gain access to a website at all. Like many of you, I typically move forward with my purchases even if the terms are not ideal because the benefit of buying a pair of shoes from Nike outweighs the risk that I will need to (or would choose to) litigate over a $200 purchase.

But depending on the nature of the business and the size of the transaction, the stakes can be much, much higher. Here's what you should know about clickwrap vs. browsewrap vs. sign-in-wrap agreements online and their enforceability.

Types of online agreements on websites

There are three main types of online agreements that both businesses and consumers should understand:

1. Clickwrap agreements

A clickwrap agreement requires users to legally consent to a company’s terms—often a privacy policy or other terms and conditions—by clicking a box that says "I Agree" or a similar button. Clickwrap agreements are often seen on a website before allowing access to a service or product. However, some MLMs and other companies have used clickwrap agreements as a form of consent for much more in-depth contractual and financial commitments.

Clickwrap agreements are generally considered legally binding. However, some caveats and limitations can lead to legal disputes. For a clickwrap agreement to be valid, there must be clear language outlining what users are agreeing to, and accepting the terms must be voluntary. Further, the prominence of certain terms is important.

For example, an arbitration provision or jury waiver in bolded, all-capital letters has a better chance of being enforced than one buried in pages of terms without any visual call-out. Terms that are deemed unconscionable or hidden will not pass muster in court.

Requiring a consumer to at least scroll through an agreement before accepting it, like Apple does, can be an easy and efficient way to strengthen enforceability, but many companies fail to utilize it.

3. Browsewrap agreements

Browsewrap agreements are more passive because a company simply links its policies or terms and conditions at the bottom of a webpage and hopes that customers will find them (or not). Often the terms and conditions to which the user is agreeing are available via a hyperlink, requiring additional action by the consumer.

Browsewrap agreements are inherently more challenging to enforce because consumers do not have to expressly consent to terms before using the website or service. Major companies like Zappos have faced legal challenges for burying terms and conditions agreements in unnoticeable portions of the website and with nondescript titles.

4. Sign-in-wrap agreements

The key difference between a sign-in-wrap agreement and a clickwrap or browsewrap agreement is that the user must take specific steps to sign in to a website and, in the process, accept certain terms and conditions. The physical action required by the user to accept the terms serves to both call out to the user that they are agreeing to specific terms and provides the business with record evidence on the back end that the user agreed to such terms.

Sign-in-wrap agreements require users to affirm their consent to the agreement simply by signing in but may not otherwise require a user to review specific terms and conditions and then click “Agree” as with a clickwrap agreement. Uber lost a major case related to sign-in-wrap agreements when the court found that its mandatory arbitration clause included in its terms and conditions was not reasonably conspicuous such that a consumer would understand that by simply registering an account with Uber and signing in, they were agreeing to these terms and conditions.

There will continue to be much dispute and litigation over online agreements, and without a lot of case law on the topic, it can be a moving target. For now, businesses should work with an attorney to ensure that any online agreements their consumers are asked to actively or passively sign are clearly stated, legally valid, and do not overreach. Consumers, in turn, should recognize and consider the risks in agreeing to such terms.

FAQs on clickwrap, browsewrap, and other online agreements

About the Author

Post by: Cara Thornton

Cara Thornton is a skilled lawyer who regularly serves as outside general counsel for corporate clients, advising them on a litany of issues such as contract and employment-related matters, formation and dissolution, and risk management. Cara also leads Fortis’ trademark practice group and is a member of the firm’s Chambers-ranked litigation team, where she regularly handles complex commercial litigation cases in a wide range of matters, including intellectual property and trademark, cannabis, real estate, employment, business torts, and other business-related disputes in state and federal courts and arbitrations nationwide.

Company: Fortis Law Partners
Website: www.fortislawpartners.com
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