CLICKWRAP AGREEMENTS
Doing Business On The Web
 Every day, more and more business transactions are conducted over the Internet.
Many of these transactions begin with a "clickwrap agreement." Clickwrap agreements are variations on "shrinkwrap" agreements, those printed terms and conditions usually found in the packaging for software. Clickwraps basically work the same way, but the user agrees to the terms by clicking a button on his computer, instead of by opening the package and using the product. While clickwrap agreements are still widely associated with software licensing, their use has spread to a wide range of business settings, such as advertising services, telecommunications, and banking, to name only a few.
Given that clickwraps have become ubiquitous, it is prudent for businesses to consider their advantages and to be informed as to the desirable characteristics that any clickwrap agreement should have. As compared with their paper predecessors, clickwraps are easier and quicker for a customer to accept, and more difficult for the customer to attempt to change. They provide a measure of control that is to the business's advantage. Depending on the size of the business and its market, clickwraps can be the means by which countless
relationships are formed and deals are struck, so it is vital for any business using them to get all of the details correct. To ensure enforceability and to head off later legal problems to the greatest extent possible, companies should seek and use the advice of legal counsel as they create clickwraps tailored to particular businesses.
Once a business decides to use a clickwrap agreement, there are certain traits that should be considered:
- Put the steps in the right order. Before a customer is expected to pay for the product or service, or is allowed to receive it, he should be given the chance to review the entire clickwrap agreement and the option to accept or reject all of its terms and conditions.
- Identify the user. If the party who comes to a company's clickwrap represents another company, it is especially important to get identifying
information that will show that the user is authorized to bind his company to the agreement. To this end, the clickwrap should have places for the user's name, the company's name, the user's title, and both e-mail and physical addresses. Of course, aside from its value for such verification purposes, the identifying information can be useful in other ways.
- Do not make the user hunt. The clickwrap should be readily apparent to a user, and the "install" or "download" button should appear only after the clickwrap is set out in its entirety. In the same vein, a checkbox indicating that the user has agreed to the terms of the clickwrap makes good sense. The idea is to prevent anyone from claiming in a later dispute that there were
parts of the agreement that he could not have easily seen, and to which he did not give his assent. As for any terms that are weighted in favor of the business, making them hard to find is an especially bad idea. On the contrary, these terms should stand out, maybe even with their own "I agree" checkbox.
- Drop the legalese. As is true for any contract, a clickwrap should use clear, plain English. It is well settled in law that a court will construe
ambiguous terms against whoever wrote them, that is, the business whose clickwrap is being deciphered.
- Make the clickwrap control. If there are any other dealings
with the user, whether oral or written, that conceivably could be said to constitute a separate agreement, they all should explicitly defer to the clickwrap agreement. Likewise, the clickwrap itself should have language indicating that its terms override any conflicting terms in other agreements relating to the transaction.
- Keep the final word for your business. What if a user navigates successfully and accepts the clickwrap agreement, but your business determines for some reason that it wants no business relationship with that user? The business should provide itself with an escape hatch, with language in the agreement to the effect that the business must conform the agreement before it
becomes enforceable, or that the business can cancel the agreement at will.
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REAL ESTATE LAW
UPDATE
Rentals Allowed Under
Restrictive Covenant. After
a couple bought proper ty in a
subdivision, they were surprised to
learn that several homes near theirs
were going to be offered as vacation
rental property. All of the properties
in the subdivision were subject to a
set of restrictive covenants, one of
which required that lots be used for
"single-family residential purposes
only." The couple sued to get a
court to declare that renting a home,
even to one family, violated that
restriction, but the couple came out
on the losing end of the litigation.
In the plaintiffs' view, to derive rentals
from a home was to convert the
property from single-family residential
use to a prohibited commercial or
business use. The court disagreed.
Citing statistics showing that in most
states over 30% of homes are rented
rather than owned by the families
living in them, the court reasoned that
an owner's receipt of rental income
does not detract from or change
the "residential" use of the property.
The plaintiffs' position was undercut
by a separate covenant that permitted
delegation of certain owner rights to
"tenants," thus obviously contemplating
the rental of property. The plaintiffs
argued that only long-term rentals
were allowed, not short-term vacation
rentals, but they could point to no
language supporting such a distinction.
Seller's Duty to Disclose. Before
building a home on property it owned,
a developer obtained a study of the
soil conditions in the area that included
the lot for the home. After receiving the
soil study of the land, the developer
dug out some soil on the lot for the
home, reducing its grade by about
six feet, and built the new house.
That there were any concerns over
soil suitability came as news to the
buyers of the new home when, not
long after the purchase, cracks
appeared in the foundation, doors
would not open or close, and, as
the court later put it, "evidence
of excessive settling abounded."
The developer had not disclosed the
contents of the soil study to the buyers.
A state supreme court ruled that the
buyers' lawsuit for fraud should go to a
jury, reasoning that a developer/builder
may owe his buyer a duty to disclose information known to him concerning real property, including property not being conveyed to the buyer, when that information is material to the condition of the property being purchased. To be material, the information must be important. Importance, in turn,
is measured by the degree to which the information could be expected to influence the judgment of a person buying property.
The court found that a jury could well conclude that the buyers would have wanted to know about collapsible soil on adjacent land
before they bought their home. In the court's view, a property boundary should not be considered a perimeter outside of which,
as a matter of law, nothing is material to a prospective buyer.
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