What is a “Wrap” Agreement?
Online agreements are often referred to as click-wrap or browse-wrap agreements. The “-wrap” part of their names is a throwback to shrink-wrap agreements. Shrink-wrap agreements are software licenses that are hidden inside a shrink-wrapped box. How can a customer be bound to an agreement they cannot see at the time of purchase? In general terms, a shrink-wrap agreement is enforceable if the buyer had an opportunity to review the terms of the agreement before deciding whether to use the software and the terms of the agreement are not otherwise objectionable “on grounds applicable to contracts in general” (e.g., if the agreement contains an unconscionable term). ProCD, Inc., v. Zeidenberg, 86 F.3d 1447 (7th Cir. 1996).
Are “-Wrap” Agreements Enforceable?
If done properly, yes. Although there are few cases exploring the enforceability of click-wrap agreements (browse-wrap agreements are discussed below), the prevailing view is that click-wrap agreements will be upheld if users are given reasonable notice of the terms of the agreement and manifest their assent to the agreement. Feldman v. Google, Inc., 513 F.Supp.2d 229, 236 (E.D. Pa. 2007). A big takeaway from Feldman is that the enforceability of online contracts relies on basic contract principles (i.e., whether the user knew the terms of the agreement and whether the user manifested their assent to the terms of the agreement). In Feldman, the user was required to create an account by visiting a website that immediately displayed a scrollable text box containing the agreement with a “prominent admonition in boldface to read the terms and conditions carefully.” Id. at 237. The agreement was not hidden at the bottom of the page or behind a series of hyperlinks. The user was then required to take “affirmative action and click the ‘Yes, I agree to the above terms and conditions’ button” in order to proceed in the registration process. Id. at 237. The court upheld Google’s agreement because the user was given reasonable notice of the agreement and the user manifested his assent to its terms with the click-through mechanism.
Google’s success in Feldman is contrasted with Netscape’s failure in a 2002 case from New York. Specht v. Netscape Communications Corp., 306 F.3d 17 (2d Cir. N.Y. 2002). In Specht, the court refused to uphold an arbitration provision contained in an agreement that was hidden behind a hyperlink that appeared in a “submerged” part of Netscape’s website. The agreement said that when the user clicked a download icon on the Netscape’s website it was entering into the hyperlinked software license. The court found that the user did not have reasonable notice of the terms of the agreement when it clicked the download icon. The mechanism that Netscape was attempting to use to manifest the user’s assent to the agreement (i.e., the clicking of the download icon) was not physically close enough or related enough to the terms of the agreement for the clicking to actually manifest the user’s assent. The Specht case can be viewed as both a browse-wrap and click-wrap case due to the download icon’s lack of proximity to the related agreement.
Strategies for Strengthening Enforceability