Clickwrap agreements are generally considered enforceable; however, if the proponent of a clickwrap receives notice that only certain people, such as executives, are authorized to bind a company, subsequent clickwrap acceptance by others may not bind the company. In a recent case brought against SysLOCATE, the plaintiff, National Auto Lenders, alleged that defendant’s GPS units for tracking vehicles were defective. During settlement, National Auto Lenders notified SysLOCATE that only its officers were authorized to bind the company and all communications regarding the matter should be directed to plaintiff’s counsel. SysLOCATE subsequently implemented an amended clickwrap agreement significantly limiting its liability for defective products. Its customers had to accept the amended clickwrap to access the SysLOCATE website to track vehicles using the GPS products. The court found that a contractor and an employee of National Auto Lenders who agreed to the amended terms of use in order to access the site and track vehicles did not have apparent authority to accept the clickwrap on National Auto Lender’s behalf because National Auto Lenders had notified SysLOCATE that only its executives were authorized to bind the company. In reaching its decision, the court held that this notice made it unreasonable for SysLOCATE to believe that the individuals who accepted the clickwrap were authorized to do so.

TIP: Your written contracts with online service providers should state that online terms have no effect, or that in the event of a conflict the written agreement takes precedence. If your company is in a dispute with an online service provider, consider giving the provider formal written notice that only certain people at your company are authorized to enter into agreements or amend existing agreements. For service providers, where there is no notice, avoid arguments by including in a prominent statement adjacent to your clickwrap’s “Accept” mechanism that the user who accepts the agreement terms on behalf of an entity is authorized to do so.