Shrink wrap contract

Shrink wrap contracts are license agreements or other terms and conditions of a (putatively) contractual nature which can only be read and accepted by the consumer after opening the product. The term describes the shrinkwrap plastic wrapping used to coat software boxes, though these contracts are not limited to the software industry. Web-wrap, click-wrap and browse-wrap are related terms which refer to license agreements in software which is downloaded or used over the internet.

Software licenses are commonly called End User License Agreements or EULAs.

United States

The legal status of shrink wrap contracts in the US is somewhat unclear. One line of cases follows "ProCD v. Zeidenberg" which held such contracts enforceable (see, e.g., "Brower v. Gateway" [http://www.kentlaw.edu/legalaspects/tony_brower.htm] ) and the other follows "Klocek v. Gateway, Inc.", which found the contracts at hand unenforceable (e.g., "Specht v. Netscape Communications Corp." [http://www.nysd.uscourts.gov/courtweb/pdf/D02NYSC/01-07482.PDF] ), but did not comment on shrink wrap contracts as a whole. These decisions are split on the question of consent, with the former holding that only objective manifestation of consent is required while the latter require at least the possibility of subjective consent. In particular, the Netscape contract was rejected because it lacked an express indication of consent (no "I agree" button) and because the contract was not presented directly to the user (users were required to click on a link to access the terms). However, the court in this case did make it clear that "Reasonably conspicuous notice of the existence of contract terms and unambiguous manifestation of assent to those terms by consumers are essential if electronic bargaining is to have integrity and credibility." Specht, 356 F.3d 17.

It may be worth noting that the user in the Zeidenberg case had purchased and opened the packages of multiple copies of the product, and therefore could not easily prove he remained ignorant of the contract/license; whereas in many cases, the so-called shrink-wrap "license" agreement has not been reviewed at the time of purchase (having been hidden inside the box), and therefore is arguably not part of the implicit legal agreement accomanying the sale of the copy, and is thus not enforceable by either party without further "manifestation of assent" to its terms. In general, a user is not legally obligated to read, let alone consent to any literature or envelope packaging that may be contained inside a product; otherwise such transactions would unduly burden users who have no notice of the terms and conditions of their possession of the object purchased, or the blind, or those unfamiliar with the language in which such terms are provided, etc. At the very least, the fair trade laws of most U.S. states would grant a buyer the right to cancel the purchase of a product where an enclosed contract provides terms of which purchaser can not be aware at the time the product is purchased.

Further reading

* cite news
first = Cory
last = Doctorow
author = Cory Doctorow
url = http://www.informationweek.com/news/management/showArticle.jhtml?articleID=197003052
title = Shrinkwrap Licenses: An Epidemic of Lawsuits Waiting to Happen
publisher = InformationWeek
date = 3 February 2007
accessdate = 2007-02-03

* cite news
first = Debora
last = Halbert
author = Debora Halbert
url = http://www.murdoch.edu.au/elaw/issues/v10n4/halbert104_text.html
title = The Open Source Alternative: Shrink-Wrap, Open Source and Copyright
publisher = Murdoch University Electronic Journal of Law
date = December 2003
accessdate = 2007-02-20