Clickwrap agreements are agreements formed on the Internet. A website provider generally posts terms and conditions and the user clicks an "I Accept" button. The courts have generally held these agreements to be enforceable. Recently, some website providers have been skipping the "I Accept" process for fear that online users will not want to go through this extra step and may instead leave for another website. However the recent Second Circuit case of Schnabel v. Trilegiant Corp., 2012 WL 3871366 (2d Cir. Sept. 7, 2012), has reminded website operators to be exceedingly careful in assuring that an agreement has been formed.

In Schnabel, the contracting process included filling out an enrollment screen. After inserting information into the boxes on the enrollment screen, the purchaser clicked on a "Yes" button agreeing that the vendor could transmit credit card data. The vendor followed up with an email of terms and conditions, which, notably, included an arbitration provision. The court found that the contract was formed at the moment the plaintiffs entered their information into the online enrollment screen, and that the follow-up email was not sufficient to add additional terms such as the arbitration clause. The terms and conditions were not shown on the enrollment screen.

For this reason, an online vendor should employ the following registration process prior to taking any order information.

As an initial matter, evidence of an electronic signature can be as follows:

  • Clicking "I Agree"
  • Typing one's name into a signature block
  • On a telephone pad, selecting certain numbers
  • Continuing through to the following pages on a website
  • Using a cursor or other device to manually scroll one's name on a device
  • Inserting a digital representation of an individual's signature

For an electronic signature to be effective, the sound, symbol or process must show the signer's intent to be bound to the particular terms and conditions associated with that action, and must be attributable to the specific person against whom those terms and conditions are intended to be enforced. As an example, there could be text above an "I agree" selection that clearly indicates that by selecting the "I agree" button, the person agrees to be bound to specified terms and conditions.

A clickthrough agreement with an electronic signature should be mandatory and non-porous and should have the following characteristics:

  • Mandatory -- users on the website cannot proceed to the next destination without going through a screen soliciting their consent to the terms and conditions and any other necessary documents (e.g., a customer who enrolls in a program, completes a purchase, or downloads software cannot complete the enrollment/checkout process without clicking “I Agree” to a box on the web page).
  • Non-porous -- there are no alternative ways that the users can reach the destination. For example, if the account is initially set up manually with a Company representative on the phone with the user, the mandatory process may become porous if the vendor can sign onto the website without going through the mandatory consent process.
  • Clickthrough -- the user exhibits consent to the contract by clicking, and the user is told that the click signifies consent.
  • Certification -- the user is asked to check an additional box as a certification that the user has read the agreement.
  • Authorization -- a user representative confirms that he/she is authorized to contractually bind the user by clicking on a box.

Best practices in a commercial transaction would include requiring registration which includes the following:

  • Company to provide a list of and direct access to all Documents to be approved by the user.
  • Confirmation that the user has provided a valid email address of an authorized executive who will be acknowledging the Documents. This improves the ability of Company to be able to stay in contact with the user, including acknowledgments on a periodic basis and communications concerning those acknowledgments.
  • Have the user who is registered as authorized (i.e., the "Registrant") identify his/her position with the user and confirm that s/he has the authority to contractually bind the vendor. There should be a methodology to confirm that the Registrant is who s/he says via email or otherwise.
  • Having the user scroll through the Terms and Conditions and other applicable Documents and affirmatively click "I Accept," acknowledging that the user accepts the terms and conditions with a conspicuous link to the Documents. Caselaw suggests that such procedures make the terms and conditions more likely to be enforceable than simply informing the vendor that by proceeding, s/he accepts the terms and conditions.
  • On an annual or other reasonable periodic basis, have the commercial user re-acknowledge the Documents.