Legal battles sparked by Digital Contracts: Exploring How Clickwrap Agreements Influence Online Consent and Compliance

INTRODUCTION

 Contract law as a foundation of modern legal system plays an important role in facilitating smooth and secure transaction in the world of business and commerce. The advent of technology has greatly impacted the technology of contract law. From well written contracts to the transformative power of the internet and technology, it has tremendously transformed itself into an efficient and accessible contract formation. With computers and internet playing a bigger part in business and the delivery of goods and services, electronic standard form of contracting has grown in popularity. In addition to the procedural burdens associated with traditional contract settings, users of the electronic contracting environment deal with additional ones. The majority of these burdens are related to finding, using, and understanding electronic terms. They also stem from the various ways that users view the electronic environment and the ways that electronic contracts are formed. Because they are so used to clicking through websites, users these days might not understand the importance of the terms, the legal ramifications of checking a box, or even that there are binding terms at all.

 The purpose of this research is to understand how clickwrap fails to notify users about the consent process, which manifest legal issues and how it implies that proper process is not important and dissuade participation. the researcher believes to understand that the social media platforms or digital interface may effectively manufacture consent or assent through the use of the clickwrap as a political economic mechanism. In an article by Herman and Chomsky (1988) it was suggested a central component of clickwrap agreements propaganda is to content of the medium keeps the consumers moving towards the end. Which means that these agreements indirectly persuade the consumers to move forward as quickly as possible including the monetary section. The purpose of this research is to explore how CWA has emerged itself despite the legal challenges in the field of electronic contracting.

History of clickwrap agreement :

The term "click-wrap" agreements originate from "shrink-wrap" agreements, which are licence agreements used in the majority of today's packaged consumer software sales. The process of "shrinking" the clear cellophane packaging around the product box during manufacturing is where the term "shrink-wrap" originates. Software manufacturers originally tried to print the entire licence text, visible through the cellophane wrapping, on the outside of the product box, along with a warning that the user would be bound by the licence terms upon breaking the seal and opening the box. These days, software is copyrighted and its users and data are subject to the terms of an agreement inside the box. A well-written shrink-wrap notice should state this on the outside of the product packaging. The terms of the licence are printed in full in the user guide. The 1998 landmark case of Hotmail Corp Vs. Van$ Money pie the court granted preliminary injunction based on its likelihood of success on a variety of claims, including, importantly breach of contract, based on clickwrap license agreement. Soon after the decree passed in the Hotmail case, another case with a similar issue and similar conclusion was passed two months after the former decision at the Rhode Island Superior Court, Groff Vs America Online Inc the court provided a detailed rationale on how to enforce CWA. Courts have applied essentially the same analytical procedure and upheld the majority of clickwrap cases that have been heard since these two cases were decided. In essence, the Courts decide whether the necessary click happened and, if it did, assume that the user agreed to the terms stated in the contract. Only a small number of times have courts declined to enforce the clickwrap agreements' terms. These instances never became the question of whether a single click was adequate to indicate consent. Rather, these Courts either declined to uphold the agreements due to inadequate proof of clicking, or invalidated the agreement in accordance with established contract law

2.     WHAT IS CLICKWRAP AGREEMENT? HOW DOES IT WORK?

A clickwrap agreement is a kind of digital contract that asks users to proactively indicate their acceptance of terms and conditions (T&Cs) before using a service, accessing content, or completing a purchase. It is also referred to as a click-through agreement or a click-to-accept agreement. Online transactions, software installations, mobile applications, and website registrations all frequently use it. The terms and conditions of a clickwrap agreement are shown to users, usually in a separate pop-up window, dialogue box, or on a special page. To express consent and acceptance of the terms, the user must take an explicit action, like checking a box, clicking a "I agree" or "Accept" button, or even digitally signing their name.

Figure 1.1

An illustration of the clickwrap agreement on a signup page can be found in the image above. Before registering to use the platform, each new user needs to tick this box. The user or customer will not be permitted to access the company's products or services without specifically indicating consent. Clickwrap agreements are now a fundamental component of the digital environment, influencing how companies communicate with their clients. Most likely, when we use software frequently or are an avid user of apps, we always come across a clickwrap agreement. These agreements, which specify the rights, obligations, and restrictions of each party, operate as a legally binding contract between the service provider and the user. They are intended to safeguard company interests and guarantee that users understand and abide by the terms of service. They are crucial in the digital sphere because they create a clear understanding of the responsibilities and expectations of both the service provider and the user. Compared to other types of online agreements, like browse wrap agreements, these agreements have a higher degree of enforceability because users must actively agree to the terms. Following are some examples of CWA:

a)     Software Licensing Agreement

b)     Social media account registration

c)     Cookie policies

d)     Data processing agreements

HOW DOES CWA WORK?

Clickwrap agreements are implemented by the user interface, which shows the terms and conditions to the user. The interface usually directs users to a webpage or pop-up window containing the agreement when they try to access a service or product. After reading the agreement or scrolling through it, the user must expressly indicate that they accept it.

Affirmative action can be as easy as checking the box that says, "I have read and agree to the terms and conditions," or clicking the "I Agree" button. To further confirm their acceptance, the user might occasionally be asked for more details, like their name or email address. The service or product is made available to the user upon acceptance of the terms, at which point the clickwrap agreement is legally binding. When using the service or product, the user is expected to follow the established terms and conditions.

    KEY ELEMENTS OF CWA: A clickwrap is a straightforward working mechanism. It consists of various basic elements that guarantee its efficacy and enforceability. These elements include:

a)     Offer and acceptance: The user is shown a set of terms and conditions in a clickwrap agreement, which they have to accept in order to use the product or service. By checking a box in a pop-up window or dialogue box or by clicking the "I agree" button, the user indicates that they accept the terms.

b)     Consideration: Mutual consideration is necessary for these agreements, which implies that something of value must be exchanged by both sides. Most of the time, the service provider gets the user's agreement to the terms and the user has access to the service or product.

c)     Clear and unambiguous Language: To guarantee that users can understand the terms they are agreeing to, these agreements must be written in a clear and understandable manner. Wording that is unclear or deceptive may make the agreement less enforceable.

d)     Record keeping: A mechanism for keeping track of user acceptance on the backend is required. This mechanism should include the IP address or device information, the date and time of acceptance, and any other pertinent information. Given that it can be used as proof that the user accepted the terms and conditions, this is essential for legal enforcement.

e)     Severability: According to the severability clause, the remaining terms of the clickwrap agreement will remain in force even if any part of it is determined to be invalid or unenforceable. For instance, in the event that a clickwrap agreement's provision is deemed unenforceable, the agreement's remaining terms would still be enforceable as long as the unenforceable portion was eliminated.

THE ENFORCEABILITY OF CLICKWRAP AND ROLE OF CONSENT: ALTERNATIVE DOCTRINES TO TEST THE VALIDITY OF CWA:

According to Nathan J Davis, alternative legal doctrines apply to several categories of disputed terms, including the more contentious ones. These doctrines can be used to prevent licensors from unfairly exploiting licensees’ potential ignorance of the terms of clickwrap agreements. The unconscionability doctrine, for instance, has been used broadly to evaluate the terms of different clickwrap agreements and can be applied to a wide range of contract types. Courts also have the authority to reject any contractual clauses that go against public policy. The following are the alternative doctrines to test the validity;

      I.          Forum selection clauses: Forum selection clauses are the most commonly litigated term in clickwrap agreements, so their fair enforcement is crucial. It is well-established that even though these terms are deemed to be legitimate, they must first pass a further judicial review before being put into effect. According to the courts, the presumption of validity will be overcome by evidence showing that enforcement would be unreasonable in the given situation. This can happen in the following situations:

(1) the forum selection clause was added to the agreement by fraud or overreach; (2) the party trying to avoid enforcement will, in all likelihood, be denied his day in court due to the severe inconvenience or unfairness of the chosen forum; (3) the plaintiff will be denied a remedy due to the fundamental unfairness of the chosen law; or (4) the enforcement of the forum selection clause would be in violation of the state's strong public policy. In the case of William Vs. America Online Inc the court refused to enforce a forum selection clause that specified Virginia as the exclusive forum for all litigation. The plaintiffs claimed that the installation of AOL's software had damaged their computers and they were suing on behalf of a class of Massachusetts residents. The plaintiffs' requirement to travel from Massachusetts to Virginia in order to pursue their relatively minor claims against AOL was ruled by the court to be against public policy.

    II.          Arbitration Provisions: Until recently, consent was recognised as the fundamental element of arbitration, however the evolution and expansion of the arbitration has resulted in the divergent views on the consensual nature. The US Supreme Court in Volt Information Sciences Vs Leland Stanford, Jr. University recognized that “arbitration under the [Federal Arbitration Act] is a matter of consent, not coercion, and parties are generally free to structure their arbitration agreements as they see fit” Clickwrap arbitration clauses are often examined through the lens of the unconscionability doctrine; nevertheless, these arguments frequently fall short, much as the claims of unreasonableness in the context of forum selection.

  III.          Software usage agreement: Consent plays an important role even in these kinds of agreements. Even if the agreement is not read by those who use the program or service it is still a binding legal document. Recently, attempts to use copyright prevention as a defence against accusations of clickwrap software licence agreement infringement have failed. Despite the defense's lack of success, courts have not completely rejected the doctrine's applicability, and many maintain that the courts erred in their refusal to give pre-emption arguments more due consideration. This is discussed since the law may still be developing and pre-emption could become a strong defence against allegations of software licence violations.[17]

  IV.          Unconscionability, Public Policy and the remaining litigated terms: According to Nathan J Davis, the study of these doctrines show that the courts may include these doctrines if unreasonable terms are litigated. “Because these terms rarely arise in litigation and the courts have shown that they are aware and presumably capable of applying these doctrines, if necessary, there is nothing to suggest at this time that unreasonable terms cannot be adequately addressed within the current framework.”

  RELATIONSHIP BETWEEN CLICKWRAP AND CONSENT

          The foundation of legal approaches to online privacy is consent. In various global settings, such as the US, Canada, the EU, and others, where privacy regulations are formulated using the Fair Information Practice Principles (FIPPs), legitimate data management techniques are generally characterised as those that have been approved by users. Consent is a cornerstone of privacy law, the degree to which users are able to give consent and the types of consent that are given complicate this reality. Informed consent, defined as "an autonomous authorization" by the individual, is the highest standard of consent. In its most basic form, this theoretical ideal proposes that people have a complete understanding of what they are consenting to, which is a form of self-governance.

When there is no explicit acknowledgment, consent is assumed to have been given. For instance, using a social media platform where the terms of service are accessible through a link in an app or on a website would be regarded as giving implied consent even in the absence of accessing, reading or agreeing to policies. It is argued that many operators of social media services use the clickwrap, a specific mechanism for achieving a form of implied consent, as a political-economic tool to get users connected to services as quickly as possible, both generally and specifically to monetized sections of those services. By doing this, these service providers are inadvertently encouraging users to ignore consent materials that explain users' rights and obligations as well as what happens to their personal data. Water Lippmann once said “that manufacture of consent is capable of great refinements, no one I think, denies the opportunities for manipulation open to anyone who understands the process are plain enough."

HOW HAVE COURTS TREATED ASSENT IN CWA? : In majority of cases, the courts have taken a straightforward aspect to analyse the enforceability of clickwrap disputes. The court will begin by looking into the aspect whether the user had actually assented to the terms or not. Judges have nearly determined assent when a user clicks "I Agree" after being made aware of the term, despite some disagreement regarding whether this should be sufficient. If one of the party objects on the grounds that they did not read, value, or comprehend the contract, the court will address those objections. The assent analysis has been essentially reduced by the courts to a test of whether there is proof that the user clicked the acceptance icon or took an action that would not have been possible had they not clicked on the icon. The courts will often find assent without much discussion if the party asserting the term can demonstrate the proof of either of the alternatives.

PROBLEMATIC RELATIONSHIP BETWEEN CLICKWRAP AND CONSENT PROCESS:  Many of the CWA cases showcased the controversies about the consent process as under

a)     Fails to notify user: Users are not informed by the clickwrap that a consent process is underway. The prominence of the "ACCEPT" button and the relatively smaller, less noticeable, or even hidden policy links seem to be the two causes of this. Users "don't even see the text below, and the links to the privacy and TOS policies are "not emphasised".

b)     Consent Process Unimportant: CWA are digital prompts that facilitate consent processes by allowing users to quickly accept or deny the digital media policies. They can, however, also aid in getting around consent materials, which deters people from respecting privacy and reputational rights by giving the impression that consent materials are unnecessary.

Nathan J Davis argues in here that courts are only required to perform a mechanical analysis in order to determine whether the evidence supports the claim that the action that violated the agreement actually happened before such a click. The courts quickly dismiss the parties arguments as irrelevant, even though they occasionally persist in claiming that they should be released from the contract due to excessively long and cryptic terms, that they did not read the agreement, or that they cannot recall clicking "I accept."

5.3 POLITICAL ECONOMY OF CWA: Consent materials frequently include legal references as well, which may clarify user rights and the institutional strength that supports disagreement. In certain instances, there are references to advocacy groups that work to defend and advance civil liberties; these could offer users additional channels through which to express their concerns and seek support. Additionally, links to services that could assist users and their supporters in addressing their concerns are frequently included in consent materials. Links to services that manage cookie settings, customise marketing, and even review and remove data are common examples. More recently, there has been provision of privacy materials, such as transparency reports, which start to explain the relationship between service providers and government agencies that submit requests for lawful access.

   HOW CAN CWA BE MADE ENFORCEABLE?

Clickwrap agreements are enforceable in many jurisdictions due to their widespread acceptance and recognition in the legal system. When a user clicks "I agree” button, the courts have typically been willing to mechanically assume that they have given their consent without going into further detail about what the click means legally or how much notice may be needed. However, there are several factors to be noted for the enforceability of CWA as follows:

a)     Mutual Assent:  It needs to be proved that both the parties have given their consent. Consent is not meaningful unless people are truly informed, have appropriate choices and are able to make a good risk assessment in exercising their choices. In the case of Recursion Software Inc Vs. Intern active intelligence Inc, The courts have accepted evidence of actual clicking or evidence that the user's actions would not have been possible without clicking to proceed, even in cases where the user has not read the terms and conditions and cannot recall clicking to agree to terms.

b)     Notice of Clarity: The OSP should notify the users that the use of website, service, product etc will be subject to the terms and condition in the clickwrap agreement. The courts typically consider the clarity of CWA, and how the users were notified of the terms and conditions.

c)     Unconscionability: A contract which is unfair or one-sided that it would be unfair to enforce it is said to be unconscionable. To make sure a clickwrap agreement does not unfairly disadvantage or exploit users, courts may review the agreement's fairness. It is advisable to draft clickwrap agreements with reasonable and balanced terms to avoid potential unconscionability issues. if the terms are considered to be overly unfair to the customer, the court may refuse to enforce some or all of the of the agreement.

d)     Capacity to consent: the agreement can be enforced if the user is able to consent to its term. A minor’s consent is held to be void. This means that the user has to be of legal age and mentally capable of comprehending or accepting the terms of the agreement.

    HOW IS CONSENT TREATED IN INDIA, EU AND US:

Consent plays an important role in all privacy laws. With the consent of individuals, a collection of wide data is possible. Usually, the term consent comes with two approaches firstly the notice and choice approach predominantly used by the US and the express consent approach by the European Union. In the United States the common approach to collection of data’s is the notice and choice approach. Privacy notices are created by organisations to inform individuals about the gathering and use of personal information. People have the option to "opt out" of specific disclosures and uses, like selling or sharing personal information with outside parties. In essence, it's a take-it-or-leave-it decision to either do business with the organisation or not. In other cases, organisations give individuals the option to refuse specific uses of their data; if they choose not to, their consent is assumed.

Transparency is the primary requirement of the notice-and-choice approach; individuals are responsible for reviewing the privacy notice and determining whether or not to proceed. Failure to opt out is taken as implicit consent to any collection and processing of personal data.

Whereas the European Union has taken a strong and alternative approach to consent, that is the express consent or otherwise known as affirmative consent requires a clear voluntary indication of consent. This approach is the fundamental of EU’s GDPR. Art.6 and Art.7 of GDPR explains the lawful basis of collecting and processing personal data and conditions for consent. The GDPR provides individuals the right to withdraw consent from the future processing of personal data.

The Indian Digital Personal Data Protection (DPDP) Act requires consent (Section 7) for data processing. Data fiduciaries must get clear, informed, and express consent from data principals before collecting, processing, or disclosing their data under the Act. Consent must be voluntary, precise, informed, and unambiguous. Furthermore, data fiduciaries must conveniently allow individuals to revoke their consent at any moment. To promote transparency, the Act requires data fiduciaries to tell individuals about how their data will be used.

 LEGALITY OF CWA IN INDIA, EU and US:

      INDIA: The enforceability of clickwraps and e contracts are mentioned under S.10 of the Indian Contract Act and S.10 A of the IT Act. There's no specific stringent rule to determine the enforceability. It is rather decided on a case-to-case basis, in LIC India V Consumer Education and Research Centre the court held that the courts have the power to intervene in disputes arising out of contracts between the parties if the contract formed is an adhesion contract. In yet another case of Didt Mumbai Vs Gujarat Pipav Pvt Ltd, the tribunal held that if one party has an excessive negotiating power, the clickwrap may well be deemed as unenforceable even if they include all necessary components of valid contracts. Although there is no specific legislation or extensive legal provision or framework, there is adequate legal and judicial backing for clickwrap agreements.

 EU: Although EU does not have an extensive case law history unlike US, but its privacy laws are stricter, which makes CWA a compliance tool. EU has established legal framework such as the EIDAS Regulation (Electronic, Identification, Authentication and Trust Services) for electronic signatures and contracts which includes clickwrap agreements. Another regulation is the GDPR which directly does not address clickwrap but its notice requirements make it essential, wherein Article 5 of GDPR requires users must be informed of how the data is used, collected and stored and given more notice for their rights under privacy laws.

  US: The US courts have generally taken a favourable view of clickwrap agreements. The courts have famously decided in favour of the defendants/website/proprietor when it was demonstrated that the user had truly "clicked" or accepted the terms upon indication by the dialogue box. In the famous case of Hotmail Corporation vs. Van Money Pie Inc. was among the initial cases to determine whether a click wrap agreement could be enforced. By selecting the "I agree" button, the defendant in this case had clicked into a click-wrap agreement with Hotmail. The defendant used to explicit contents violating the terms, whereas one of the terms of the agreement forbids the distribution of unsolicited material via Hotmail, the plaintiff claimed that this had violated the agreement. The court granted the plaintiff's request for judgement, ruling that the click wrap agreement was legally enforceable. Since 1999 additional statutory support has been provided for the enforceability of CWA, as such the UETA (Uniform electronic Transactions Act) and ESIGN (Electronic Signatures in Global and National Commerce Act).

CONCLUSION: FUTURE OF CLICKWRAP AGREEMENT

The clickwrap is a digital prompt that gives users the option to accept or reject digital media policies quickly, facilitating consent processes. Results point to the political-economic role that clickwraps play in enabling consent materials to be circumvented. Herman and Chomsky’s aspect of “buying mood” to compare how social media maintain flow to monetized sections of services while deflecting attention from policies that might encourage dissent is a major guidance. Clickwraps achieve this by using an agenda-setting feature that prioritises prompts that encourage circumvention over policy links.

The study showed how clickwraps, normalise this circumvention by implying that consent materials are irrelevant, deterring people from engaging with privacy and reputation protections. The clickwraps have political and economic purposes implies capitalist method of production successfully integrated into manufacturing consent. The primary question that raises here is why users consent to agreement without even reading the terms and conditions? The main reason for this attitude found in the study is “the desire to enjoy the ends of digital media” and the same is supported by Obar and Oeldarf Hirsch who suggest that users want to instead of engaging in tangential discussions or learning about data, they want to take advantage of the affordances of the services they download. It was evident from the users that they wanted to circumvent the consent materials.

 A mechanical assent analysis has been adopted by courts, despite the contentious nature of clickwrap agreements. This kind of analysis aims to ascertain whether the "I Agree" button was actually clicked. Terms of service and privacy policies are displayed to users when they first access a website or online service. The user must accept these terms and policies as an agreement in order to use the website or service. Almost all users just click "I agree" without carefully reading these contracts. Based on whether a "reasonable person" would comprehend that clicking this signifies agreement to those terms and policies, the law interprets this as consent. However, a question that comes to mind is what can be the reasonable man-test we could propose if the courts rely on mechanical assent analysis? To answer this the researcher points out to the statement put forward by Judge Weinstein, who distinguished between various types of clickwrap and other hybrid forms. He formulated a four- step process to analyse the hybrid form wrap contracts which are as follows:

1.     Apart from selecting the equivalent of "sign-in" (such as "buy-now," "purchase," etc.), is there any convincing proof from the website that the user understood that she was consenting to something more than a request for goods or services in exchange for money? If not, the buyer should not be subject to enforcement of the "terms of use," including those pertaining to venue and arbitration.

2.     Were the "terms of use” clearly and easily accessible to the user through the layout and content of the website, including the homepage? If not, the buyer should not be subject to enforcement of the "terms of use," including those pertaining to venue and arbitration.

3.     Was the physical assent required of a customer looking to buy or subscribe to a service or product something that diminished or obscured the significance of the terms of the contract? If so, the buyer should not be subject to the "terms of use," which include provisions about arbitration and venue.

4.     When a customer initiates an online transaction from her state of residence, did the merchant clearly point out any material terms that would change what a reasonable customer would understand to be her default rights? If not, the customer should not be subject to enforcement of those terms.

The researcher supports the theory put forward by Gardiner and Nathan J Davis on the distinctions between traditional and electronic contracts, as well as the fact that consumers view paper and electronic communications differently, must be considered by the courts. While the click may, in theory, indicate agreement, the drafting party still has an obligation to make sure that the other party has a chance to read the document, comprehend the circumstances, assume responsibility for the conduct that is considered evidence of intent to be bound, and consent to the terms being incorporated. Based on this, the court may investigate the click button's visibility and labelling as well as whether the website provider has made any mention of the legal implications of clicking to agree.