This article was first published by AMTIL.
- Online agreements allow businesses to transact with customers without having to negotiate or interact with each user individually.
- Australian courts recognise agreements that have been created online, provided that the basic elements of a contract can be established.
- Clickthrough agreements are generally legally binding in Australia, but browsewrap agreements are more difficult to enforce.
Have you recently bought a product online, downloaded an app or other software on your device, or purchased an online subscription? It is likely are that each of these transactions would have involved entering into an online agreement.
Online agreements are now commonplace in everyday transactions. Properly implemented, an online agreement can permit businesses to create an enforceable contract with customers without having to negotiate or interact with each user individually.
For an online supplier of goods or services, it is critical that your online agreement is legally enforceable. Australian courts will recognise agreements that have been created online provided that the basic elements of a contract can be established. Generally this includes acceptance of contractual terms by both parties, a meeting of the minds, and an intention to create legal relations.
There are two types of online agreements, clickthrough (or clickwrap) agreements and browsewrap agreements.
A browsewrap agreement is an online agreement that is created (typically between a seller of goods or services and their customer) without any consent or positive step by the customer.
Browsewrap agreements do not require any consent or agreement to terms or conditions from a user before taking an active step to proceed with download of content or completion of a transaction (for example, ticking a box to confirm agreement to a set of terms and conditions).
These agreements are high risk as the user could claim they were not made aware of the terms and conditions and did not have a reasonable opportunity to consider them.
Australian Courts are less likely to consider browsewrap agreements as binding contractual relationships between the parties because it is difficult to demonstrate acceptance of the terms by the user.
Clickthrough agreements are created when a user ‘clicks’ or ‘checks‘ a box (or otherwise takes a positive step) to indicate acceptance of terms and conditions displayed online.
The positive step substitutes a real signature and is often used to enforce software licenses or authorise online transactions.
After the user has given their consent, they can continue to download the relevant content or complete the relevant transaction. If the user rejects, or choose not to agree to the terms, the online agreement and their interaction terminates.
Australian courts are more likely to recognise a clickthrough agreement as legally binding if the following conditions are satisfied:
- Reasonable Notice: The user must have had enough notice and opportunity to read the terms of the agreement before accepting the terms. Ideally, users will be required to read the terms by scrolling through the text before proceeding, but a clickthrough agreement may also be enforced when there is a clearly and prominently displayed hyperlink indicating the existence of the terms and conditions.
- Positive Step: The user must take a positive step (such as clicking ‘agree’ or ‘accept’) to confirm that they have read and consent to the terms of the agreement. The box should not be pre-ticked. The wording of the acceptance and agreement is important, as is how the terms and the ‘accept/agree’ button are arranged on the page.
- Unusual Terms: Any unusual or onerous terms should be displayed in bold or highlighted in some manner to draw the user’s attention to the terms. This point is particularly important when the user is a consumer or small business. A consumer or small business is typically considered to have less bargaining power, and has the benefit of consumer protections contained in the Australian Consumer Law (ACL) which prohibit ‘unfair’ terms in consumer contracts. Whether a condition is ‘unusual’ depends on the circumstances. Relevant factors include the nature of the contract and the parties as well as the industry context. For example, if a term or obligation is typical in a particular industry, it will not be considered unusual in a commercial contract used in that industry and there would be no special onus to bring it to the user’s attention.
What does this mean for me?
For online suppliers of goods or services, it is critical that your online agreement is legally enforceable. If the basic elements of a contract cannot be established, you may not be able to enforce its terms for example, if a customer defaults in payment or breaches a term of a licence agreement or you would like to terminate the agreement.
Even the most carefully prepared terms and conditions will not be able to be enforced if they are not properly implemented.
If you sell or licence goods or services online, you should review your terms to ensure that they are drafted appropriately for an online context, and that they are properly communicated to your customers. Our expert contracts team would be delighted to assist you.
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