All wrapped up
12 There is a running joke being shared
online among IT professionals
that the leading force in digital
transformation was the COVID-19
pandemic, not the CEO or CTO as
one might expect. While humorous,
there is an element of truth to this.

As the world went into various forms
of lockdown, many businesses
were forced to go online with their
offering of goods and services, in
some instances erecting websites
and payment platforms overnight.

So, as the world engages in this digital
transformation and e-commence
becomes the predominant way of
buying goods and services, how do
you ensure that your online contracts
or website terms of service are
valid and enforceable? Thankfully,
Justice Beach of the Federal Court
in Dialogue Consulting v Instagram 1
has recently considered the question
of the formation of contract when
using ‘browsewrap’, ‘clickwrap’
and ‘sign-in wrap’ agreements.

In Dialogue, Instagram was
looking to obtain a stay of the
proceedings on the basis of that
there was an arbitration agreement
between the parties which arose
from Dialogue’s acceptance of
the online Instagram terms and
conditions. Dialogue opposed the
application and denied there was a
valid arbitration agreement. Taking
guidance from US Courts, Beach
J observed that they classified
agreements into one of three types.

Clickwrap Those in which users of the site
are required to scroll through
1 …how do you
ensure that your
online contracts
or website terms
of service are valid
and enforceable?
all the terms and conditions
of use before they are able to
click the ‘I agree’ button.

Browsewrap The website doesn’t require any
agreement or affirmative action to
be taken in respect of the terms and
conditions. The use of the website,
continuing to engage with or use
the services provided is taken as
the user agreeing to be bound by
the terms and conditions, usually
published somewhere else on
the website. A common example
of browsewrap agreements is in
the ‘terms and conditions’ found
in the footer of many websites.

Sign-in Wrap
The user of the site is notified that
there are terms and conditions
associated with their use of the site,
and that by clicking the ‘sign-in’ button
they are agreeing to be bound by
Dialogue Consulting Pty Ltd v Instagram, Inc [2020] FCA 1846
those terms and conditions. Taking
Facebook as an example, when you
provide your details to set up an
account there is a notice above the
‘Sign Up’ button that says ‘By clicking
Sign Up, you agree to our Terms,
Data Policy and Cookie Policy.’ Terms,
Data Policy and Cookie Policy are
hyperlinks which take you to those
relevant terms and conditions.

It is worth noting that the Courts’
position on what constitutes which
type of ‘wrap’ agreement can
differ to the generally accepted
understanding of what is meant by
clickwrap from an IT perspective, and
emphasises the importance of having
lawyers also review any proposed
website layout and agreements.

Justice Beach in Dialogue confirmed
that whether online agreements or
terms and conditions are enforceable
is a question of reasonable notice and
manifestation of assent. He noted
that the US Courts have a large body
of case law on the subject, and that
the Australian common law contains
and applies similar principles.

Reasonable Notice
Reasonable notice is an objective
test to determine whether there
was sufficient notice given so that
a reasonably prudent person would
understand that an offer to enter into
a contract was being made. Did the
person entering into the contract
have actual or constructive notice
of the provisions of the contract?
In considering whether reasonable
notice has been provided, the
courts will look at the layout and
user interface of the website. Is
Inspire March 2021
The enforceability of clickwrap, sign-in
wrap and browse wrap agreements