The Sign-in Wrap Contract: A new type of online contract

Online contracts have been at the forefront of ecommerce and the increase in number of online transactions in recent years has resulted in various types of online contracts. Broadly speaking, the 2 main types of online contracts are the click-wrap contract and the scroll-wrap agreement. Our commercial lawyers have prepared an article on these types of contracts here.

What is a sign-in wrap contract?

The sign-in wrap contract is a relatively new type of online contract which internet users should be aware of. Sign-in wrap contracts combine a user’s agreement to the terms and conditions of a website with the sign up process for the website. They are essentially a blend of click-wrap contracts (acceptance via the clicking of the “I Agree” box) and browse-wrap contracts (deemed acceptance via connection to a website).

The developing legal position and adoption of this new terminology in the USA

The US case of Berkson v Gogo LLC[1] is one of the first cases to reference this new sign-in wrap. In relation to enforceability, Judge Weinstein outlined a 4 part test as follows:

  1. Is there “substantial evidence” that the user understood that he/she was agreeing to actual terms and conditions;[2]
  2. Are the terms of use clearly available to the user (bearing in mind the website’s design);[3]
  3. How assent is achieved (usually by clicking on the ‘I Agree’ button) and does the manner in which this happens confuse or minimise the importance of the contract?;[4] and
  4. Does the contract draw material terms to the user’s attention (in particular, those which may impact on their rights)?[5]

Interestingly enough, in Resorb Networks Inc v,[6] the New York Supreme Court adopted the general approach in Berkson v Gogo LLC[7]. However, the 4 part test in Berkson v Gogo LLC[8] was not adopted.

Whilst the US courts have begun to adopt the sign-in wrap terminology, the test for validity and enforceability remains unclear.

Application to Australian Law

Case law relating to sign-in wrap contracts is still in its infancy in Australia, with no landmark cases at the time of writing. If and when a test case in Australia is finally decided, it will be of interest to see how, and if, US case law is applied. We are also starting to see an emergence of the other types of contracts such as smart-contracts, which are effectively automated or scripted contracts.

Our Commercial team is consistently tracking the development of Australian law in this space and our dedicated lawyers have the knowledge and expertise to address concerns you may have in relation to online contracts. Find out more about our commercial legal services.

Author: James Tan (Senior Associate)

[1] 97 F. Supp. 3d 359 (E.D.N.Y. 2015).

[2] Ibid, at 403.

[3] Ibid.

[4] Ibid.

[5] Ibid.

[6] 30 N.Y.S.3d (N.Y. Sup. Ct. 2016) at 511-12.

[7] 97 F. Supp. 3d 359 (E.D.N.Y. 2015).

[8] 97 F. Supp. 3d 359 (E.D.N.Y. 2015).

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