As students, faculty, and other educators cruise the web, searching for information or services, they are finding that more and more of the sites visited require assent to a list of terms and conditions governing site use. It’s easy… simply click the mouse on the box marked “AGREE” and continue. These so-called “click wrap” agreements are direct offspring of “shrink wrap” contracts, the fine print verbiage found in almost every software package (on the wrapper, in the instruction insert, or in the opening page of the program when it runs). In each case, the user agrees to the warranty limitations and other terms simply by using the software or accessing the contents of the web page.
The legal controversy created by these agreements is still in its infancy. The problem is compounded by the disparity between the rapid expansion of technology and the agonizingly slow progression of lawsuits through the system. Definitive court decisions are rare and, because they apply to the limited jurisdiction of the court, can be radically different from judicial rulings in other venues.
In part, this is due to judges and lawyers feeling their way through murky high-tech legal issues with only caselaw applicable to paper transactions to guide them. In Step-Saver Data Systems v. Wyse Technology, a 1991 decision by the 3rd Circuit U.S. Court of Appeals, the panel decided that a shrink wrap contract was not binding because the parties had done business by telephone, written purchase order, and other means that superseded the warranty limits in the shrink wrap pact. A 1993 case (Arizona Retail Systems, Inc. v. The Software Link, Inc.) determined that the shrink wrap agreement was binding on the original software purchase as soon as the package was opened, but threw in a real clinker. Noting that the shrink wrap agreement had not been further discussed or assented to in subsequent purchases made by phone and in writing, the court held that the shrink wrap contract did not apply.
Some clarity was added in the 1996 decision in ProCD, Inc. v. Zeidenberg, by the 7th Circuit Federal Appellate Court. It overturned a lower court ruling that shrink wrap agreements were unenforceable and concluded simply that “Shrink wrap licenses are enforceable unless their terms are objectionable on grounds applicable to contracts in general.” Recently, a federal judge in California issued an injunction in Hotmail Corp. v. Van Money Pie, Inc., based on the validity of a click wrap agreement made when downloading software from a web site. In addition to following the logic of the ProCD case, the judge cited the 1997 decision in Hill v. Gateway 2000, Inc., which upheld contracts shipped with mail order computers that automatically take effect when the buyer opens the box and uses the computer for 30 days.
The treatment of shrink wrap and click wrap agreements as normal contracts makes a lot of sense. They really aren’t that much different from the non-negotiated and unsigned contracts that appear in the micro-print on airline tickets and admission tickets to concerts and sporting events. The only difference in the case of click wrap agreements is the total substitution of electronic bits and bytes for letters and words on paper.
The law surrounding shrink and click wrap agreements is by no means settled. There are more cases crawling through the courts and an effort is underway to modify the model law that is adopted by each state to bring it into the e-age.
For now, issues such as whether the person who clicks the mouse can legally bind your school system are likely to be decided based on the same law that would apply if there was a signature on a written contract.
The real headache is the accessibility of so many people who use the web. It’s easy to keep students, faculty and others from signing written contracts, but webpages are much more accessible.