Title of the project

Shrink wrap and Click Wrap contracts

Submitted By
Name-Sunidhi Singh Div-D PRN-19010223060 Class- BA LLB (2019-2024) of

Symbiosis Law School, NOIDA

Symbiosis International (Deemed University),PUNE

In
August, 2019

Under the guidance of

Prof. Ms Pallavi mishra

Symbiosis Law School, Noida

 CERTIFICATE

The Project entitled “Shrink wrap and click wrap contracts” submitted to
symbiosis law school, NOIDA for Contracts as part of internal assessment is
based on my original work carried out under the guidance of Prof. Pallavi
Mishra from July to October. The research work has not been submitted
elsewhere for award of any degree.

The material borrowed from other sources and in corporate in the research
has been duly acknowledged.

I understand that I myself could be held responsible and accountable for

plagiarism, If any detected later on.

Signature of Candidate- _________________

Date- _______________
 ACKNOWLEDGEMENT

I would like to thanks to Ms Pallavi Mishra for guiding and encouraging me

throughout the project. I would like to extend my heartfelt gratitude to her
for active guidance, cooperation and help with the absence of which I would
not have completed the assignment.

I would also like to extend my towards the library staff and in charge for
helping me out with the suitable books and resources required.
INTRODUCTION

It is human tendency to keep them busy in one way or the other one of the
activity they carry out for their survival is making money or in other words
carrying out economic activities. In the 21st century we have seen a new
type of commerce has expanded and now include e-commerce as well. E-
commerce more than a boon to us has become a necessity. Now we carry
out transaction electronically almost daily from buying electronic gadgets to
daily grocery needs. E-commerce became a part of Indian society post 2005
but this has grown exponentially and now consists of Indians on both ends
business providers and consumers.

India Contracts act, 1872 basically takes care of all the contracts within the
territory of India. There are certain conditions to fulfill for an agreement to
become a valid contract. The essentials of a valid contract are

1. Capacity to contract
2. Offer and acceptance
3. Lawful consideration
4. Free consent
5. Lawful object

All agreements enforceable by law is a contract1 . As this was drafted back in

1872 this did not cover the aspect of e-contracts. Section 10 of the Indian
Contracts Act can be used to draw an inference regarding E-contracts the
section reads as follows “All agreements are contracts if they are made by
free consent of parties competent to contract for a lawful consideration with
a lawful object, and are not hereby expressly declared to be void. Nothing
herein contained shall affect any law in force in India, and not hereby
expressly repealed, by which any contract is required to be made in writing
or in the presence of witnesses, or any law relating to the registration of
documents.”2 Thus e-contracts have been interpreted on these lines and
there is said to be a valid contract formed when there is an offer and
acceptance in the prescribed manner and in the same sense. Now this can
be done by the help of a website, emails, online forms and agreements.
When we talk about e-contracts or agreements they are classified into three-
1
Indian Contract Act 1872 ; 2(h)
2
Indian Contracts Act 1872 ; 10
 1. Shrink wrap agreements
2. Click wrap agreements
3. Browse wrap agreements

If we try to explain each one briefly the first one shrink wrap contract allows
a party involved to read the terms and conditions of the contract after they
open the box this is however not directly related to e-commerce but is a kind
of contract. Click wrap contract is one of the most common type of contract
in this the user is asked to click on the I Agree box indicating they agree to
the terms and conditions, here the users get involved in a contract or
become a party to it after a click. In the third type of agreement browse
wrap the user becomes a party of the contract by just navigating through
websites by the help of hyperlinks the terms and conditions are specified.

CLICKWRAP CONTRACTS

A click wrap contracts requires the user to affirmatively click on the I agree
box by this the user accepts the terms and condition affirmatively. They
enter into a contract after clicking the “’I agree’ box after being presented
with a list of terms and conditions of use”3. It is immaterial if users actually
read the terms and conditions. The basis of acceptance of click wraps. The
basis of acceptance of click wraps and stronger enforcement of such forms of
contracts is the assumed acceptance of terms through prior notice to users.4
US courts have held click wrap even in those cases where users did show
they did not read the terms and conditions.5
From the various judgments one can conclude that the courts upheld parties
entering into such contracts have prior notice of the terms and conditions
and therefore they are bound to those terms and conditions. All the terms
and conditions are applicable on the party until and unless it is a case of
fraud, misrepresentation, terms contrary to public policy or unreasonable.
When a party is given ample time to read the terms of contract irrespective
of whether the party had read the terms or not6 the agreement is deemed to
be accepted along with the terms and conditions and is binding on the party.

3
Nugyen V Barnes & Noble INCs (supra)
4
Hancock V American Telephone and Telegraph Co, 701 (10th CIR, 2012)
5
Davis Vs HSBC bank Naveda
6
Rudbart V N. Jersey district Water supply comm’n (19920
In Caspi Vs The Microsoft network the court held that “no good purpose
consonant with the dictates of reasonable reliability in commerce, would be
served by permitting” plaintiffs “to disavow particular provisions or the
contracts as a whole”. Click wraps are governed by the same laws as other
forms of standard contracts.7
Paper size does not matter the terms and conditions might be on paper or
online both are equally binding, In Caspi V The Microsoft Network8 declared
the “validity and enforceability” “a forum selection clause in an on-line
subscriber agreement of the Microsoft Network (MSN), an on-line computer
service.” In this case the court had the option of ‘I Agree’ and ‘I don’t agree’,
the court said as the font size was same as that of the due forum it was
noticeable.
The click wrap agreement was held enforceable as it only turned into an
agreement when the user clicked on ‘I Agree’. In Feldman Vs Google, Inc,9
Every click became really expensive as Feldman, a lawyer, availed of the
“Adwords” advertising program from google, where the plaintiff was required
to pay for each click on the advertisement in other words known as pay for
click advertising. Feldman became the victim of this “click fraud”. The court
in this case held that click wrap is a valid form of contract, which a prudent
Internet user is ought to read before clicking on the ‘I Agree’ button.

If we see in the Indian context, In Capgemini Business Services (India) Ltd v

Assistant Commissioner of Income Tax10 the Mumbai bench of ITAT rightly
held that “Software contracts, like many other transactions, are governed by
common law principles as embodied in the Indian Contract Act and
elaborated on click wraps as under:

The other popular way of transfer/sale or licensing the software is through

‘Click Wrap’ agreement. In this the software developers do not depend or
receive a signed agreement from the user instead relies on the customers
assent via the internet.

Apart from this judgment there is not a particular case with click wrap
agreement in India

7
Stout v. J.D. Byrider, 228 F.3d 709 (6th Cir. 2000)
8
Casby V The Microsoft Office 253 F.3d 34
9
Feldman Vs Google 513 F. SUPP 2d 229 (ED PA 2007)
10
Capgemini Business Services (India) Ltd v ACIT, 2016 SCC ITAT 948 (Mumbai bench)
SHRINK WRAP

As the name suggests shrink wraps are nothing but contracts where the
terms and conditions are wrapped in cellophane. Such forms become
prevalent usually on purchase of software products. The terms are signifies
on the wrapping and the user is indicates that once the package is opened
they will accept the terms and conditions and enter into a contract. In some
cases the user would be given the option to return the product even after
opening the package. In 1996, the US Court of Appeals first decided on the
legality of shrink wrap agreements in ProCD, Inc V Zeidenberg11. In this case
the court reversed the district court’s finding which said that shrink wrap
contract cannot be enforced as the user did not had prior information
regarding the terms and conditions. The Appeal court held that shrink wrap
contracts are enforceable. In this case, the terms of license for a user of a
CD was set outside the wrapping therefore it is understood that the
purchaser had the prior notice of the terms governing usage thereof. In
CompuServe Inc v Paterson12 the judgment is considered the first of its kind
for deciding personal jurisdiction for Internet based transactions and could
be considered a fore runner for click wraps.

In India the courts and tribunals have considered shrink wrap contracts as
valid provided the customer had prior knowledge of the terms and agreed to
be bound by them by his actions13. In InfoTech Software Dealers Association
v UOI14 while deciding the bench at Madras High Court held that the Shrink
Wrap Software is a box containing the CD/DVD, user manual and end user
license agreement. The box is wrapped in plastic and therefore called shrink
wrap. In Microsoft Corp v I Sadiq Batcha15 the bench at Delhi High Court
granted degree against violation of trademark and copyright in the software
inter alia sold

11
ProCD, Inc. v Zeidenberg, 86 F. 3d 1447 (7th Cir. 1996).
12
Compuserve Inc v Paterson, 89 F.3d 1257 (6th Cir. 1996)
13
Thornton v Shoe Lane Parking Ltd
14
Infotech Software Dealers Association v UOI, 2010 SCC Online Mad 4503
15
Microsoft Corp v Mr I Sadiq Batcha, 2009 SCC Del 1714
There are many such cases through which the enforceability and legality of
shrink wrap contracts are held it is becoming one of the most common type
of contract after click wrap through which e-commerce is carried out.

ARTICLE REVIEW

BOOK- Electronic signatures in Law16

Author- Stephen Mason
Chapter- The ‘I Accept’ and ‘Wrap’ methods of indicating intent
Page Number- 225
In this chapter the author has studied the click wrap and browse wrap kind
of contract with the help of case law the author explains the enforceability of
the contracts in US and how the judges interpreted in various ways. There
are many ways he explains the idea as why click wrap contracts are
enforceable and the user becomes a party to the contract only when he or
she is informed of the same. In England and Wales the Law Commission has
suggested that electronic form of signature is the technological equivalent of
a manuscript signature using a cross. To summaries the author has used the
case laws to explain the click wrap and browse wrap contracts.

Harvard law journal 17

Volume- 110 no.8 June, 1997
Page no- 1946- 1951
In this journal a case is discussed ProCD Inc. v. Zeidenberg, the facts are
stated and the interpretation of shrink wrap licenses back in 1997 is
discussed. It is over the dispute between ProCD and Zeidenberg and the
legality of shrink wrap contract and when one enters into a contract on
buying the software or after opening the packet it comes in. I agree as the
party is considered a part of the contract only when they open the packet
they agree to the terms and conditions

16
Mason, S. (2016). The ‘I accept’ and ‘wrap’ methods of indicating intent. In Electronic
Signatures in Law (pp. 205-214). School of Advanced Study, University of London.
Retrieved from http://www.jstor.org/stable/j.ctv5137w8.14 accesed on 30th July 2019
17
Contract Law. Shrink-wrap Licenses. Seventh Circuit Holds That Shrink wrap Licenses Are
Enforceable. ProCD, Inc. v. Zeidenberg, 86 F.3d 1447 (7th Cir. 1996). (1997). Harvard Law
Review, 110(8), 1946-1951. doi:10.2307/1342053 accesed on 30th July 2019
The Business Lawyer, Vol. 57, No. 1 (November 2001), pp. 401-42918
Despite the relatively small number of cases assessing the validity of
electronic agreements, there was an emerging body arguing over its legality
at that time in 2001, this is discussed in the journal all over in a very precise
manner.

CONCLUSION

We can conclude that today Click wrap and Shrink wrap are considered valid
forms of contract in India it is interpreted by the help of Indian Contracts
Act, 1872. All this did not emerge overnight a lot of case laws appeared all
over the globe and were interpreted and the scope of electronic agreements
were discussed. In the end it was declared valid and enforceable on certain
conditions as it was believed by clicking on the ‘I Agree’ box on a website or
on opening a packet of software the user gives his assent accepts the terms
and condition and becomes a party to the contract.

18
Kunz, C., Del Duca, M., Thayer, H., & Debrow, J. (2001). Click-Through Agreements:
Strategies for Avoiding Disputes on Validity of Assent. The Business Lawyer, 57(1), 401-
429. Retrieved from h
ttp://www.jstor.org/stable/40688063 accessed on 31st july 2019
BIBLIOGRAPHY

 https://advance.lexis.com/
 https://www.jstor.org/
 http://web.b.ebscohost.com/ehost/search/selectdb?vid=0&sid=acf9af04-c726-4689-8c56-
b44c28fac794%40sessionmgr102
 https://www.emerald.com/insight/
 The Indian Contract Act, Sir Dinshaw Fardunji Mulla