Are what are commonly known as “click-wrap” or “shrinkwrap” software licenses enforceable? If so, under what conditions? Specifically, what is the outcome if a contract is silent with respect to the license of software, but software is delivered and accepted with a license? Similarly, are “web wrap” licenses enforceable (i.e., licenses presented to the customer at time of download of software)?
This question will be answered from a high level in this article – for more detailed advice contact Ravie Govender at email@example.com
The starting point from a South African ICT perspective is looking at the Electronic Communications and Transactions Act (2002) (the ECT Act). The ECT Act provides for legal validity of (for instance) electronic contracts and transactions. This is also in line with popular global standards.
Generally, ordinary electronic signatures are valid and so is an expression of intent. It applies when information is in the form of a data message. Intent
can also be inferred by other means aside from signature.
Section 22 of the ECT Act states: (1) An agreement is not without legal force and effect merely because it was concluded partly or in whole by means of data messages. (2) An agreement concluded between parties by means of data messages is concluded at the time when and place where the acceptance of the offer was received by the offeror.
Section 26(1) of the ECT Act states: The agreement is valid upon receipt of the acceptance and it is not necessary for the offeror to acknowledge receipt. In terms of the ECT a contract is concluded at the time and place when the offeror receives the message of acceptance and applies to electronic transactions including contracts concluded by email and SMS.
Shrink Wrap and Click Wrap (also called web-wrap and browse-wrap) agreements all refer to the way in which the contracts are concluded, more so than the content thereof.
In Shrink Wrap agreements terms of the agreement become valid and enforceable when the plastic shrink wrap is broken or when the software is installed. Examples of this is when software licenses are placed within the shrink-wrap of the software package itself. There are however instances where it may be voidable if the buyer’s attention was not drawn to the terms and conditions. Usually the T&C’s are contained on the inside of shrink-wrap or the first screen pop-up asking for acceptance when you install software online. These become enforceable and deemed as being acceptable when the shrink wrap is broken and the software/product is used.