Terms of Use

By Mark A. Lemley. Full text here.

Electronic contracting has experienced a sea change in the last decade. Ten years ago, courts required affirmative evidence of agreement to form a contract. No court had enforced a “shrinkwrap” license, much less treated a unilateral statement of preferences as a binding agreement. Today, by contrast, it seems widely (though not universally) accepted that if a business writes a document and calls it a contract, courts will enforce it as a contract even if no one agrees to it. Every court to consider the issue has found “clickwrap” licenses, in which a user clicks “I agree” to standard form terms, enforceable. A majority of courts in the last ten years have enforced shrinkwrap licenses, on the theory that people agree to the terms by using the software they have already purchased. Finally, and more recently, an increasing number of courts have enforced “browsewrap” licenses, in which the user does not see the contract at all but in which the license terms provide that using a Web site constitutes agreement to a contract whether the user knows it or not. Collectively, these agreements are called “terms of use” because they control (or purport to control) the circumstances under which buyers of software or visitors to a public Web site can make use of that software or site.

This Article explains how courts came to enforce browsewrap licenses, at least in some cases. This Article also suggests that if browsewraps are to be enforceable at all, enforcement should be limited to the context in which it has so far occurred—against sophisticated commercial entities who are repeat players. Finally, this Article argues that even in that context the enforcement of browsewraps creates problems for common practice that need to be solved. Business-to-business terms of use are the modern equivalent of the “battle of the forms.” We need a parallel solution to this “battle of the terms.”