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Clickwrap Agreement Validation by Everprove

Web businesses generally formalize their legal relationship with the users via general terms and conditions, which are generated in the form of a clickwrap agreement. Like traditional paper contracts, these online agreements are also subject to fundamental principles of contract law. To become binding, they shall be executed in a proper way, and they shall be recorded and archived for the case of possible latter disputes.

According to a recent study, during the previous 15 years the number of litigation cases related to online clickwrap agreements have exploded by more than 600%. Both B2C and B2B online businesses are concerned by legal cases, and with the expected rise in GDRP-related investigations the number of open legal disputes will surely rise further.

As an interesting aspect, in the beginning the main question was whether clickwrap agreements are valid or not, but lately litigation started to concern the record-keeping aspects and the related burden-of-proof as well.

But hey, what are we even talking about? Let”s see what the term “click-wrap agreement” means first. Clickwrap is a method of getting legally binding agreement to your legal documents. It means that the user has actually clicked “I Agree” to the Terms and Conditions and Privacy Policy or shown that they explicitly agree in some way. It is significantly different from the so called browsewrap agreements where the user is notified of the existence of the contract by a link located somewhere on the screen, but the user is not explicitly required to signify assent.

Here are some US legal cases which concerned online agreements, and questions on enforceability and record keeping.

Legal Case: Moretti v. Hertz 

Mr. Moretti booked a rental car from Hertz through the Hotwire website, and claimed that he was forced to pay for unwanted insurance services and charged an inflated foreign currency exchange rate when he went to pick up his rental car. The user claimed that Hotwire may have made false representations in the Terms of Use and that the hyperlink was possibly malfunctioning at the time of his purchase. This legal case shows to us, that a clickwrap agreement is only as good as your ability to prove that a particular user accepted a particular version of the agreement on a particular date. Accordingly, it is not enough to properly execute the online agreement, but it should be recorded, archived and be available in a possible court litigation.

Legal Case: Bazemore v. Jefferson Capital Systems 

In this dispute the court stated that „there is no evidence that the Internet web page or pages that Ms. Bazemore viewed (…) displayed or referred to any terms or conditions of the credit card she sought, much less that she was required to consent to any such terms in order to obtain her credit card”. Furthermore „It is defendant’s burden (…) to prove the existence and terms of the contract it wishes to enforce.” „As defendant offered no competent evidence to demonstrate the existence of a genuine issue of material fact concerning the existence of an arbitration agreement, its motion (…) must be denied as a matter of law…” As a result, Jefferson Capital Systems became exposed to a costly class action lawsuit because it was not able to prove the exact and individual content of its online terms and conditions. 

Legal Case: In re Zappos.com Inc., Customer Data Security Breach Litigation 

Relating to a dispute whether there was a valid arbitration clause in the Terms of Use online agreement of Zappos, the court stated that Zappos upheld the right to unliaterally change the Terms of Use at any time without the notice to the customer. According to the judge no mutuality of obligation exists in such a case, therefore the following – rather strong – statement was made: We join those other federal courts that find such agreements illusory and therefore unenforceable.” As a takeaway you should note that changes to your standard online clickwrap agreements shall be explicit and properly communicated to the users, and your business shall be in a conditions to prove these fact by proper record-keeping.

Your clickwrap website agreements are real contracts, and you need to treat them as such! Not being able to show and prove the individual user agreements can result in disastrous consequences… 

TERMZ by Everprove is a solution which allows you to properly record each and every individual clickwrap agreement that you enter into with the users of your website. We turn your standard online agreements into binding legal documents via individual execution with a qualified electronic signature, and record all of your contracts on the Everprove Ledger, which is a blockchain-powered database for the immutable storage of your fundamental contracts.

Learn more by clicking here!

Published in Clickwrap Termz by Everprove