What Type of Electronic Contract Should Self-Storage Operators Use?

Electronic contracting, including the use of mobile or web-based applications in self-storage, has been around awhile. As time has passed and the courts have reviewed and studied the different forms of these contracts, it has become clear which contracts are more likely to be deemed enforceable by the courts. 

Electronic contracts are typically divided into four types: "Browsewrap," "Sign-in wrap," "Clickwrap," and "Scrollwrap."

Browsewrap agreements generally disclose the contract terms only through a hyperlink, and a customer’s “assent” to the terms and conditions of the agreement is inferred by the customer browsing the site or using the application. In a browsewrap agreement there is usually no button to click or any other method of acknowledgment for agreement to the terms. The use of the site is itself deemed acceptance.

Similarly, Sign-in wrap agreements include a notice to the customer on the website or application stating that, by “signing-in” or “registering,” the user is deemed to have accepted the terms and conditions of the agreement. Again, there is no button to click other than the one the customer uses to sign in. 

In contrast, clickwrap agreements are sites or applications where the user must voluntarily and actively check a box indicating that the customer agrees or consents to the applicable terms and conditions before using the site or purchasing a product or service from the site. The terms and conditions may be included on the site or app or hyperlinked. 

Finally, in scrollwrap agreements, the user is provided the complete set of terms and conditions on the site or application itself and the user must scroll to the bottom of those terms and conditions to click a box signifying that they “agree” or “consent” to those terms and conditions.

To be enforceable, the courts have looked at a number of factors within these agreements, but most importantly whether the user engages in some conduct that “manifests their assent” to the terms of the agreement. Therefore, the act of clicking on a button to accept the terms after physically scrolling through the them is generally a stronger indicator of assent than the simple use of a hyperlink within the body of the website or application itself. If, in addition to the button itself indicating the user’s acceptance, there is additional language notifying the user of the legal significance of the action of acceptance, the expectation of enforceability will be greater. 

In terms of consideration, there is no doubt that scrollwrap agreements are seen more favorably by the courts than browsewrap agreements. Clickwrap agreements are also favored, while sign-in wrap agreements are often found to be subject to dispute, depending on how the terms are presented (font size, color of the text, location of the text, and obviousness of the hyperlink).

The central question concerning the enforceability of these agreements is again the “manifestation of assent” by the user. So generally, the components of a strong website or application contract include prominent display of the terms and conditions, readability and clarity of the terms and conditions, and presentation (color, font, design) of the assent button and related text information.

Ultimately, if the acceptance button in a clickwrap or scrollwrap agreement is obvious, presented at the end of the applicable terms and conditions, and easily identifiable as the method of accepting the presented terms and conditions, the likelihood of enforceability is much greater.  The following series of cases – Feldman v. Google, Specht v. Netscape, Bragg v. Linden Research, and Sarchi v. Uber Technologies – all give great insight into the consideration of electronic contracts and how the court views and interprets these contracts.

In summary, based on the court’s recent decisions, the best approach to electronic contracts is the use of a scrollwrap agreement in which the active affirmative consent of the user is primary. Little doubt exists in a scrollwrap agreement that the user has been presented the terms and conditions of the agreement with the clear notice (in a nearby text box) that their action of clicking “I accept” designates their acceptance of the presented terms and conditions, whether or not they actually took the time to read them. 

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Scott Zucker is a partner in the law firm of Weissmann Zucker Euster + Katz P.C. in Atlanta, GA. Scott specializes in business litigation with an emphasis on real estate, landlord-tenant and construction law. For more visit www.wzlegal.com. 

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This newsletter is for the purpose of providing general legal insight into the self-storage industry. It should not be substituted for the legal advice of your own attorney.