What is a Clickwrap?

A clickwrap is a contract formed over the Internet. It is commonly associated with software installation and online transactions. Sometimes called a clickthrough agreement or a clickwrap license, a clickwrap typically contains the terms and conditions of using a particular online product or service. The user enters the contract by clicking the “I Agree” or “I Accept” button.

The term clickwrap originated from the shrink-wrap contract found in software packaging. By removing the shrink wrap covering the package, the user effectively agrees to the terms and conditions that the contract may stipulate. In a clickwrap agreement, this translates to the user continuing to use a program or browse through a website after clicking the “agree” button.

Increased Internet transactions coupled with the prevalence of software downloaded online created a need for a way to preserve the rights of both online companies and end users. Clickwraps are generally used to protect software licenses from piracy and to maintain proprietary rights. They allow online companies to enter into a contract with multiple parties without having to negotiate with each one separately. This is an efficient solution, as drafting individual contracts would be extremely time consuming. A clickwrap agreement also allows the company to record electronic signatures and include additional clauses not provided in current computer law.

Clickwraps are a ubiquitous sight on the Internet and with computer software. They usually appear as a separate page when registering on a website, such as creating an email account, accessing online banking, purchasing online, and installing new programs. In software, clickwraps would normally include the End User License Agreement (EULA). The process will not continue unless the user agrees to the contract.

There have been criticisms to the application of clickwrap agreements. It is said that the majority of users do not bother to read the fine print in the contract, opting to hurry the process by scrolling to the end of the page and clicking the “I agree” button instead. The legal parlance used in the agreement can also confuse users, putting them at a disadvantage when they inadvertently misuse the product or service. In addition, employees without proper authorization may bind a company when they personally engage in an online contract.

In 1996, the landmark case ProCd v. Zeidenberg ratified the enforceability of a clickwrap agreement. The case involved Zeidenberg’s illegal distribution of SelectPhone information, a program created by ProCd. The court ruling held that since Zeidenberg was able to install ProCd, it signified that he agreed to the terms of use indicated in the program. Consequently, the program’s illegal distribution constituted a breach of contract.