Clickwrap agreements are binding contracts: key considerations for consumers and businesses

We are all conditioned to click “agree” to terms and conditions when we get a new app, update our cell phone operating system, or purchase a product or service online. But most of us do not take the time to read what we have agreed to. And many do not fully appreciate that such terms and conditions are binding contracts—even if the user did not read them before clicking “agree”.

Courts in Arizona and around the country routinely enforce these agreements, called “clickwrap” agreements. They govern the relationship between a company and a user, requiring users to click a button on a website or other interface affirming that they have read the terms and conditions before accessing services. So long as it is clear what the user is agreeing to by clicking “agree” or “accept”, has an opportunity to review the terms being agreed to, and there is a record of the user’s agreement by “click”, these agreements are generally enforced.

Clickwrap agreements often include important terms such as warranties, limitations on liability, consent to the use of personal data and waiver of the right to pursue a lawsuit in court with a jury in the event of a dispute.

We all are responsible for our own decisions to click through and accept these agreements without reading them first, but what happens if you allow someone else access to your online account, such as a food delivery service or social media account, and that other person clicks “agree” when new or updated terms and conditions are presented? Are you held to these terms even if you did not agree but someone else did on your account?

A New Jersey court recently said, yes, under certain circumstances, you can be bound to terms and conditions on your online account even if someone else clicked “agree” after logging into your account. The New Jersey court found that the plaintiffs’ minor daughter assented to an arbitration provision contained in the most recent version of Uber’s Terms of Use when she checked the box next to the statement: “I have reviewed and agree to the Terms of Use,” and pressed “Confirm” in the app prior to using her mother’s Uber Eats account to order a pizza.

Months later, the plaintiffs sued Uber for injuries they suffered from a car accident during an Uber ride when the driver ran a red light. In response to the lawsuit, Uber moved to dismiss the suit and compel arbitration because the plaintiffs had agreed to Uber’s arbitration provision through the clickwrap agreement. In reply, the plaintiffs argued that their minor daughter had consented to Uber’s most recent Terms of Use, and therefore the plaintiffs themselves did not assent.

Ultimately, the arbitration provision was deemed valid due to the clickwrap agreement, despite the fact that the plaintiffs’ minor daughter, and not them, had agreed to Uber’s Terms of Use. The court found that, even though the plaintiffs’ daughter most recently agreed to Uber’s updated Terms of Use, the agreement was in the plaintiffs’ account which she allowed her daughter to use and the plaintiff had herself agreed to three prior versions of the Terms of Use, which all contained an arbitration provision.

This court ruling should serve as a warning to consumers to read through the terms and conditions they are assenting to before clicking “I agree.” Although Arizona has not explicitly addressed the issue of whether another person can bind the user to a clickwrap agreement in the user’s account, courts in Arizona and around the country routinely enforce these types of agreements because they require active consent by the user, putting users on notice of the terms and demonstrating mutual assent.

Consumers should be particularly aware that online terms and conditions may include arbitration clauses that waive the right to commence a lawsuit with trial by jury, forum provisions dictating what state may decide a potential future lawsuit, clauses limiting liability for the business, code of conduct policies, intellectual property clauses, and procedures regarding data privacy. Consumers should ensure they understand the extent of their obligations and rights prior to assenting to the terms and conditions. Given the recent New Jersey case, users who share joint accounts should also check that they understand what another account user has agreed to.

For businesses, recent court cases clarify that clickwrap agreements are binding contracts when done properly. To create a valid clickwrap agreement, businesses should ensure that the terms are clear and transparent, the user has an opportunity to review the terms before agreeing, and that the consumer actively consents to the terms by opting in through a click or other affirmative means.

Fennemore Attorney, Andrea Marconi serves as Chair of Business Litigation at Fennemore. Her areas of practice include business and complex litigation, real estate, banking law, and health care. Claire MacCallum is an attorney with Fennemore practicing in business litigation.