Abstract
In this digital era, most contracts are done online and most people accept terms and give permissions without even reading through. As a consumer, it is highly recommended to read and acknowledge a license or agreement before signing it as much as possible; to understand what’s being offered. This includes exchange of emails, giving some apps access to certain information, etc. One should beware that such contracts are valid and there are legal ramifications for them.
From marriages, loans, wills, among others in just a click way with only use of e-signatures. Due to this development, cross border agreements ought to be protected as well. As a result some agreements were signed i.e. UNCITRAL (1). In this paper, we will explore the way how an agreement is formed online and validity. The epitome being shrink wraps, click wraps and browse wraps (2).
Keywords: Shrink, Wrap, Contract, Agreement, Licens
Introduction
With the advancement of information technology, our lives, actions and transactions have revolutionalized (3). The internet has epitomized most of our activity and interactions. With these is the e-commerce concept, which has birthed e-contracts. This helps in formation of a contract without physical presence of the parties. It saves time and makes the process simple although the negatives should not be entirely left out (4). Some of the purposes of electronic transactions include; filing tax returns, electronic records management, digital signatures among others.
E-contracts ought to be held with the same standards as paper document contracts since they include most of the essential elements (5) of a valid contract such as offer, acceptance, consideration, intention to create legal relations, and terms of contract (6). There is only little variation in the cyber-space for the online contracts e.g. unilateral etc (7).
Prevalently, the online commercial sector has boomed especially in the west and eastern countries. This has revamped to e-commerce which is mostly suited with online contracts and thus the shrink wraps, click wraps and browse wraps. There are multiple products ranging from applications, software, grocery, which can be obtained though just a click of buttons.
Online contracts are entered into through email, websites, electronic data interchange etc. It should be noted that various legal jurisdictions accept e-contracts. The general notion being; every commercial transaction whether oral, written on paper, or by other exchange of documentation, by conduct or online involves two or more persons who reach an agreement to bind themselves to give up something in exchange of another, is contract.
In France (8), article 1316- 1 of the French civil code recognizes e-contracts.
In US, such online contracts are deemed valid and enforceable as well. In the case of Pro CD V Zeidenberg (9), court upheld their validity.
In India the same is recognized as in one case of Trimex International FZE Limited, Dubai vs. Vendata Aluminum Ltd (10) where the Hon'ble Supreme Court of India held that the contract between the parties was unconditionally accepted through e-mails and was a valid contract which satisfied the requirements of the ICA, 1872 (11).
Again in India, the contracts act 1872 governs all contracts be physical or online in conjunction with the Information and Technology Act, 2000 (12). These two acts stipulate and provide for online contracts and enforceability.
In Uganda, the Contacts act 2010 stipulates and encompasses the formation, enforceability and revocation of contracts. Also through the case of Ajaib Transport Ltd V Verma Co. Ltd (13), the commercial court held that email correspondences between parties amount to a valid contract.
In online contracts we shall examine the shrink wrap, click wrap, and browse wrap agreements (14). We shall look at their enforceability, relation to physical contracts, similarities and differences.
Shrink wrap agreements/ licenses
Shrink wrap agreements are boilerplate or license agreements or other terms and conditions which are packaged with the products. They are mostly common for software products. They are usually around the packages` physical box with cellophane in order to be effective in notifying the consumer that the software is copyrighted and the end-user is subject to the terms of agreement within the box. The utilization of the product by consumer implies the acceptance of the contract. Within the shrink box, the full terms of the license are printed.
The notable companies that rely on usage of shrink wrap licenses are PC companies, phone companies, carriage companies; in the commercial transmission of programs. Shrink wrap licenses are unsigned and only indicate the acknowledgement of terms of assertion demonstrated by the license on the client`s end when they open the shrink wrap bundling or product, or by utilization of the same.
Some of the central reasons for shrink wraps by PC companies are; to notify the consumer of the terms of the guarantee, if any, made by the seller in regards to the product and to repudiate different guarantees as per the Uniform Commercial Code (UCC) (15). Also to exert terms and conditions of the permit assertion upon exchange i.e. limits on the acceptable utilization of the product, constraints of obligation, the relation of law and other authoritative procurement protocols (16).
Methods of purchasing shrink wrap products
There are two common ways to buy shrink wrap products; first is purchasing directly from the vendor that created it i.e. downloading a software from its owner`s website e.g. adobe, Microsoft, etc. And the second is purchasing from a retailer authorized to distribute the product.
Benefits of buying from a retailer are that if you buy in a large quantity you may get a discount, favorable terms though the retailer keeps themselves in a non-liable stance. But with website downloads, terms change anytime leaving no security and need for updates. Nevertheless, either ways the products are; non-negotiable, little or no warrant or indemnity (17).
Kinds of software in shrink wrap agreements
The software licensed in shrink wraps may be either open source or proprietary. Proprietary is that software developed by a single manufacturer, licensed for a fee, in object code only and is only specific to that vendor as indicated in the license agreement (17). Open source software on the other hand to software that can be modified, enhanced by the consumer because its design is publicly accessible (18).
Enforceability of shrink wrap agreements
The enforceability of shrink wrap agreements is a topic of different opinions till date even for courts of law. There is split decision and views of the same. Some courts agree that a consumer consents to the shrink-wrap agreement since they pay for and accept the product. Other courts are of the view that the consumer cannot have consented to the terms since they had no knowledge of what the terms stipulate until the shrink is removed.
An example of shrink-wrap agreement is an End User License Agreement (EULA) which may be more common when downloading software.
Case law
A landmark court case in 1996 in US; Pro CD V Zeidenberg (9), the Seventh Circuit held that shrink-wrap licenses are valid and enforceable unless their terms are objectionable on grounds applicable to contracts in general.
In India, the case of Infotech Software Dealers Association V Union Of India (19), the Honorable Madras High Court ruled that copyright of software relied upon the shrink-wrap nature of software packaging. This indicated how a DVD/CD is capable of being used in more than one hardware device. And also the hardship of disbursing physical paper licenses where there are many users.
Also Justice Ranveendran in the Indian case of Interglobe Aviation (20) proclaimed that a consumer not having read the terms is not ground for ignoring the importance of rules. There, the terms of Indigo carriage were not accepted by the high court on ground that when people buy tickets they are not expected to read the terms. But the supreme court overruled the former. Therefore the buyer is expected to read the terms in cases of shrink wraps as well.
Click wrap agreements/ licenses
Click wrap agreements can also be called click through agreements. These are digital versions of shrink wrap agreements. The user consents to digitally when they press their mouse or touch pad. Most popular example is the “I AGREE” button on software downloads or installations or permissions online. The act of clicking the “I agree” button estimates understanding of the agreement.
The user has an option of accepting or declining the product. This is where when in process of attaining such a product, he is presented with the option of “I Agree”/ “Submit” or “Cancel”/”Decline”. They amy not necessarily be provided at once i.e. they can be on different pages provided separately but what cannot be disputed is that they should be presented to the user before acceptance.
Case law
One example of a click wrap agreement is reflected in the Hotmail case (21) (22) (23). The click wrap license terms were being violated by the defendants whereby they sent spam and pornographic content therein. The court thus granted an interim injunction.
In 1998, a US case of Groff V America (24) prompted the Rhode Island Superior court to assert that by clicking the “I Agree” button, the end-user was responsible for the clauses in the terms. The court held that;
“Our Court… stated the general rule that a party who signs an instrument manifests his assent to it and cannot later complain that he did not read the instrument or that he did not understand its contents. Here, plaintiff effectively “signed” the agreement by clicking “I agree” not once but twice. Under these circumstances, he should not be heard to complain that he did not see, read, etc. and is bound to the terms of this agreement.”
Again in US, in Specht V Netsacpe Communications Corp. (25) (26) the second circuit court of appeals clarified the definition of click wrap agreements;
“A click wrap license presents the user with a message on his or her computer screen, requiring that the user manifests his or her assent to the terms of the license agreement by clicking on an icon…..”
In the recent case in 2018 involving Uber (27); the terms and service were in a faded color at the time of registration. US circuit court found the same not to be conspicuous enough for the buyer to be aware of the same since the plaintiff was not reasonably notified. The court stressed the need of clear box where buyers can tick and signify their assent to the agreement. It was the same ruling that clicking download button does not show assent to the license terms of those terms which are not conspicuous.
Browse wrap agreements/ licenses
Browse wrap agreements arise even when there is no active or actual affirmation from the consumer to the agreement. An example can be viewing a blog, by doing so, you agree to the terms of the site even if you have not in actuality viewed them. Some examples may include; privacy policy, disclaimers etc.
There is hardship in enforceability of browse wrap agreements as there are not specific cases for that matter.
Case law
In the Canadian case of Century 21 V Rogers Communications (28); court held that browse wrap agreement stood since Zoocasa accepted it using the website listings continuously.
Grounds for enforceability of click wrap and browse wrap agreements online contracts
Consent - For an agreement to be valid, there has to be consent or meeting of the minds (consensus ad idem). It can be in two forms namely; express and implied. Express consent is clearly and unambiguously stated, through verbal or non-verbal methods. Implied on the other hand is unspoken and is inferred from the person`s actions or non-actions. This requires more to prove in enforcing an agreement. Such example can be with website usage where consent is garnered through user`s scrolling through website. This may be hard to prove for in agreements.
Fairness - A factor to consider when enforcing online contracts can be the fairness. Firstly, whether it is unconscionable. This is an agreement that no reasonably informed person would agree to. Secondly is whether there was inequality in bargaining power where one party has favorable options than the other.
Notice - Also for validity of such contract, it is important to trace whether notice was properly given to the user. An example can be with pinterest updates which are informed whether one is logged in or not, or even Microsoft software updates.
The validity of these agreements is intertwined only that click wrap are more valid than browse wrap agreements. In the case of Long V Provide Commerce Inc (29), the court held that the browse wrap contract will be enforceable if the consumer has read and is aware of all the terms mentioned in the contract.
Also in Nguyen V Barnes and Noble Inc (30), the court ruled that the contract would be enforceable on basis of proximity and conspicuousness of the link.
In another case of Re Zappos Inc (31), the court ruled that these contracts cannot be enforced because the font, color and design of the links of these contracts are similar to the other links. Therefore the consumers were not able to tell the difference. Some guidelines ought to be followed with browse wrap contracts as laid down by court;
Visibility of links or buttons usually on first page not sub-pages and should be placed where can be immediately seen
A larger font for the link with an outstanding color and font to differentiate it from others.
An additional notice should pop up as the link is not enough (32).
Conclusion
The electronic products are all mostly availed to consumers by way of click wrap or browse wrap. The shrink wrap gets its name as all the terms and conditions are shrunk and wrapped in the packaging of the product. Browse and click wrap apply to digital products only while shrink wraps can be used both digitally and physically.
Previously browse wraps and click wraps were considered same e.g. privacy policy and terms of use but presently this has changed. In some jurisdictions, these laws are not developed and take a lot to enforce.
Works Cited
1. Legal Aspects of Automatic Data Processing: Report of the Secretary-General, UNCITRAL. available at http://www.uncitral.org/english/yearbooks/yb-1984-e/voll5-p328-33; Article 11 of UNICITRAL. : U.N. Doc. A/CN.9/254, 1984. 15 Y.B. UNCITRAL 328, U.N. Doc. A/CN.9/ SER.A/1984.
2. legalbites.in. [Online] December 12, 2019. https://legalbites.in/formtion-of-contracts-by-click-wrap-&-via-exchange-of-mails.
3. The proposed UNCITRAL Convention on Electronic Contracts The business lawyer. Greg, John D. 1, s.l. : American Bar Association, November November 2003, Vol. 59. pp 313-343.
4. Legal Issues in Electronic Contracts, 4 LW (JS) 90. (2008).
5. Brogden v. Metropolitan Railway. 2, 666. s.l. : AC, 1887.
6. Pharmaceutical Society of Great Britain v. Boots Cash Chemists (Southern Ltd) Fisher v. Bell [1960] 3 All ER 731, (1961) QB 394 . 1, 401. QB : 1953.
7. The basic attribute is that in unilateral contract there is no negotiation between the parties. Only one party initiates the action and leaves any member of the public to accept or not. This is clearly illustrated by Carlill v. Carbolic Smoke Ball Coy. 1893.
8. Article 1316- 1, French Civil Code.
9. Pro CD Inc. v. Zeidenburg, 86 F 3d 1447 (7th Circuit Court 1996).
10. Trimex International FZE Ltd. v. Vedanta Aluminum Ltd., (2010) 3 SCC 1.
11. Indian Contract Act . 1872.
12. Information Technology Act, assessed at. [Online] 2000. http://www.dot.gov.in/sites/default/files/itbill2000_0.pdf.
13. ulii.org. [Online] https://media.ulii.org/files/judgments/ugcommc/2020/133/2020-ugcommc-133.pdf.
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15. uniformlaws.org. The Uniform Commercial Code (UCC) is a comprehensive set of laws governing all commercial transactions in the United States. It is not a federal law, but a uniformly adopted state law. Uniformity of law is essential in this area for the interstate . [Online] transactions in the United States. It is not a federal law, but a uniformly adopted state law. https://www.uniformlaws.org/acts/ucc.
16. E. Paavai, Legal Issues in Electronic Contracts, 4 LW (JS) 90. (2008).
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19. Infotech Software Dealers Association v. Union of India, 2010 SCC OnLine Mad 4503 : 236 CTR 58 :(2010) 2 CWC 796. (2010).
20. InterGlobe Aviation Ltd. v. N. Satchidanand, 7 SCC 463 : (2011) 3 SCC (Civ) 747. (2011).
21. Hotmaail Corporation V Van Money Pie Inc. 47, (BNA) 1020. s.l. : U.S.P.Q.2d, 1998.
22. C98-20064 (N.D. Ca., April 20, 1998).
23. Hotmail Corporation v. Van Money Pie Inc 1998 WL 388389; Groff v. AOL 1998 WL 307001.
24. Groff v. America Online, Inc. File No. C. A. No. PC 97-0331, W L 307001. (RI Superior Court, May 27, 1998) : Superior Court, 1998.
25. https://en.wikipedia.org/wiki/Specht_v._Netscape_Communications_Corp. [Online]
26. Specht v. Netscape Communications Corp., 150 F. Supp. 2d 585 (2d Cir. . http://cyber.law.harvard.edu/stjohns/Specht_v_Netscape.pdf (last visited Dec. 10, 2019). : s.n., 2001.
27. Rachel Cullinane and Ors. v. Uber Technologies, Inc., SCC OnLine US-CA 1C 25. 2018 .
28. http://www.airdberlis.com/docs/default-source/articles/century-21-v-rogers---september-2011-blog-post.pdf?sfvrsn=2.
29. https://caselaw.findlaw.com/ca-court-of-appeal/1729412.html.
30. https://caselaw.findlaw.com/us-9th-circuit/1675706.html.
31. https://caselaw.findlaw.com/us-9th-circuit/1891365.html.
32. https://www.termsfeed.com/blog/browsewrap-clickwrap/. [Online]
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