Internet Contracts Overview and Analysis

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Table of Contents

Introduction
Click-Wrap Agreements
Browse-wrap Agreements
Applications of Internet Contracts
Conclusion
References

Introduction

The internet is almost impossible to navigate without the existence on online-based contracts. Consequently, various types of businesses can be conducted online where legally binding contracts are affected. There is no difference between the contracts that are made online and the ones that are made face-to-face. On the other hand, the legal provisions that govern contracts that are made via internet devices are not different from that of traditional contracts. Nevertheless, it is important to note that the finer details that apply to online are still under development. It is possible that in future the details that apply to online contracts will be different from those of physical agreements. There are various forms of online contracts including the common ‘terms and conditions’ tabs and the ‘click wrap’ button agreements (Moringiello, 2005). On most occasions, click-wrap agreements require a physical action from internet users. It is also important to note that various court judgments around the world have upheld the validity of the ‘click-wrap’ agreements. This paper is about the different forms of contracts being used in the internet.

Click-Wrap Agreements

Click-wrap agreements often require their users’ affirmation through a physical action such as checking a box or clicking on the “I agree” button. The main goal in click-wrap agreements is to place emphasis on the fact that an internet user has affirmatively acknowledged the terms of a certain service. In cases where click-wrap agreements are used, the action of clicking or checking a box passes as confirmation that a user has consented to a set of terms and conditions. Click-wrap agreements work under the assumption that the user has had the chance to review the terms and condition before clicking on a button. The obligation of the internet merchants is not to ensure that users read their terms and conditions. However, the merchants are only required to ensure that an internet user ‘has the chance’ to read their terms and conditions.

It is important to note that the action of clicking the ‘I Agree’ button does not necessarily amount to a contract. However, the main issue with click-wrap agreements is that users have a “reasonable notice and opportunity to review-whether the placement of the terms and click button afforded the user a reasonable opportunity to find and read the terms without much effort” (Femminella, 2003, p. 87). A click-wrap agreement does not necessarily depend on whether an internet user clicks on a button. However, click-wrap buttons also require that websites and other online forum present the user with a ‘visible’ contract. For instance, most “I agree” buttons are accompanied by a set of terms and conditions that are visible using a single scroll. The degree of the terms of service’s visibility should also be instant. A user’s failure to review the terms of service should be not be contributed by a difficulty to access these conditions. Nevertheless, most legal provisions require websites to have conspicuous instructions that inform a user to read the terms of service and at the same time inform the users the consequences of the click-wrap agreement.

There are various conditions that fulfill legal contractual obligations as far as click-wrap agreements are concerned. All these conditions apply to the contract between an internet user and a service provider and they should accomplish certain tasks. First, the mechanism of the click-wrap agreement “presents the terms of service to the user prior to any payment (or other commitment by the user) or installation of software (or changes to a user’s machine or browser like cookies, plug-ins, etc)” (Moringiello, 2005, p. 1307). The institution of the click-wrap button should also give internet users the opportunity to read and navigate through all the presented terms of service. Consequently, the users should access the terms of service in a “normal, readable typeface with no scroll box” (Kunz, Del Duca, & Debrow, 2011, p. 410). The terms that apply to the click-wrap agreement should also provide an internet user with the opportunity to transform the contractual stipulations into physical form as either a soft-copy or a print out document. A viable click-wrap agreement should also present users with the opportunity to decline the terms and conditions of a contract. For example, the ‘I Decline’ or ‘I Disagree’ buttons should be just as visible as the ‘I Agree’ button. Finally, the user should be able to locate the terms and conditions that he/she agreed to through a simple online search.

Browse-wrap Agreements

Unlike click-wrap agreements, browse-wrap contracts are often accompanied by mild legal controversies. Browser-wrap agreements do not require internet users to perform any affirmative action such as clicking on a button. Browse-wrap agreements do not require users to affirm that they have ‘read and understood’ the terms of a contract. Consequently, browser-wrap agreements are mostly passive because their participants do not require any form of definitive acknowledgement. Instead, both parties in a browse-wrap contract work under assumptions. For example, a websites that work with browse-wrap contracts allege to bind users with ‘casual’ actions that do not necessarily relate to terms of service, such as when users click on any other icons past the website’s homepage.

The institution of browser-wrap agreements has often been shaky because internet users are often surprised by these passive contracts. Consequently, most legal bodies contend that browser-wrap agreements are unfair in the sense that their terms of service are not explicit to internet users. Just like any other agreement, a browse-wrap contract should give individuals a chance to “notice and review the terms of the contract” (Davidson, 2010, p. 1171). The legality of browse-wrap agreements is often exacerbated by the fact that some websites fail to include a link that ushers users to a list with terms of service. Furthermore, some websites might fail to place their terms of service in a place where they are visible to internet users.

Past conflicts involving browse-wrap contracts have indicated that the enforceability of these agreements largely depends on whether the terms of service were conspicuous to internet users. In situations where the links to the ‘terms of service’ are placed in locations that require the user to ‘scroll or search’ for them, browse-wrap contracts have been ruled to be unsatisfactory. Other features that make browse-wrap contracts controversial include the fact that these forms of agreements lack the element of negotiation. Consequently, browse-wrap agreements often work on a “take-it or leave it basis” (Casamiquela, 2012, p. 475). Browse-wrap contracts are also undermined by the fact that there is usually no record to indicate whether an internet user provided informed consent. In the past, courts have appeared to favor businesses as opposed to individuals when it comes to the enforcement of click-wrap agreements.

Applications of Internet Contracts

In the history of online contracts, there have been defining instances when their legality was put under scrutiny. An example where online contracts were challenged includes the court case involving Specht v. Netscape Communications. In this court case, Netscape was challenged for issuing its clients with inconspicuous terms of service (Davis, 2007). Consequently, users could download software before reviewing the terms and conditions of their actions. In the court ruling, the judge upheld that the customers encountered the download button before they saw the terms of service. Consequently, the online contract between Netscape and its clients was not legally binding. In another court case pitting Forrest against Verizon Communications, the court upheld the validity of click-wrap contracts. In this case, the complainant had pointed out that only a small portion of the terms of service was visible and he was required to scroll in order to access the rest of information. However, the judge maintained that all contracts require the due diligence of the parties and while Verizon did its part, the complainant did not. The ruling in “Forrest v. Verizon Communications” also specified that there is no difference between contracts that are enforced through a computer and the ones that are entered through a computer.

Conclusion

The validity of online contracts is similar to that of any other agreements and it depends on simple stipulations. Click-wrap agreements are the most enforceable forms of online contracts. On the other hand, browse-wrap agreements are rarely used in scenarios that require higher levels of business conduct. The issues surrounding the validity of internet contracts are still under development and it will take time for them to become part of mainstream business activities. However, it is important to note that both click-wrap and browse-wrap agreements are part of a changing business environment.

References

Casamiquela, R. J. (2012). Contractual Assent and Enforceability: Cyberspace. Berkeley Tech. LJ, 17(1), 475.

Davidson, D. (2010). Click and Commit: What Terms are Users Bound to When They Enter Web Sites. Wm. Mitchell L. Rev., 26(1), 1171.

Davis, N. J. (2007). Presumed assent: The judicial acceptance of clickwrap. Berkeley Tech. LJ, 22(9), 577.

Femminella, J. (2003). Online Terms and Conditions Agreements: Bound by the Web. . John’s J. Legal Comment., 17(1), 87.

Kunz, C. L., Del Duca, M. F., & Debrow, J. (2011). Click-through agreements: Strategies for avoiding disputes on validity of assent. The Business Lawyer 7(3), 401-429.

Moringiello, J. M. (2005). Signals, assent and internet contracting. Rutgers Law Review, 57(13), 1307.

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