In our practice, we frequently receive questions about the enforceability of so-called "Internet contracts" - agreements reached between parties over the Internet. Generally speaking, an analysis of the enforceability of any contract is the same, whether the contract was formed by the parties over the Internet or by the execution of a written document.
Though the Internet is fairly new, the enforceability of Internet contracts is governed by the well-established legal principles which apply to traditional written contracts. To form an enforceable contract, two or more parties must mutually assent to the terms of the contract and the contract itself must be supported by some consideration. Internet contracts generally fall into one of three categories, with each one being treated slightly differently by the courts.
Shrink-wrap Agreements
Shrink-wrap agreements are named for the license agreements contained in the packaging of commercial software products. Online, these contracts provide notice that continued use of the site will constitute the user's agreement to the site's terms and conditions. Generally, courts hold that these agreements are enforceable, if proper notice is provided to the website user. On the other hand, courts will not permit one party to unilaterally impose contract terms or amended terms without proper notice to, and agreement by, the other party.
Click-wrap Agreements
Often, the user of a commercial website is asked to read a set of terms and conditions governing the activities and then asked to agree to those terms and conditions before making a purchase or obtaining the service offered by the website. Agreements entered into in this fashion are referred to as "click-wrap" agreements because the user typically indicates his or her agreement to the terms and conditions by clicking a button or hyperlink marked "I agree." Such contracts are generally binding, subject to traditional contract law principles.
Browse-wrap Agreements
In some instances, websites contain terms and conditions which purport to bind any user who visits the website, without any other manifestation of affirmative agreement by the visitor. While notice of the terms and conditions usually appears on the website, the user is not required to view the provisions of the "agreement" or to undertake any affirmative action indicating an agreement to those terms. Accordingly, many courts are hesitant to enforce the these agreements.
Conclusion
So, is an Internet contract enforceable? The best answer is maybe.
Subject to traditional contract principles, click-wrap agreements are generally enforceable and browse-wrap agreements are very difficult to enforce. Shrink-wrap agreements lie somewhere in between, though recent case law supports their enforceability.
More Information
For more information on this topic, click on one of the links below:
Common Issues Facing E-Commerce Businesses: Website Terms of Use
Copying Another Website's Terms of Use Can Lead to Trouble
Jonathan D. Frieden and Sean Patrick Roche, E-Commerce: Legal Issues of the Online Retailer in Virginia, 13 RICH. J.L. & TECH. 5 (2006), http://law.richmond.edu/jolt/v13i2/article5.pdf.
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