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Click Wrap and Shrink Wrap Contracts in the Context of Indian IT Law

In today's digital age, the internet has revolutionised contract formation with the advent of online contracts like Click Wrap and Shrink Wrap contracts. While these contracts expedite the transaction process, they also raise unique legal concerns. Let's delve deeper into these terms under the umbrella of Indian Information Technology (IT) Law.


Defining Click Wrap Contracts

Click Wrap contracts are digital agreements where the user signifies their consent by clicking on an "I agree" or similar button. They typically apply in scenarios such as software installation, online purchases, or signing up for a digital service. The user must click the button to proceed, thus binding themselves to the terms and conditions of the service or product.



Click Wrap Contracts under Indian Law

The Indian Contract Act, 1872, which governs contract formation, does not specifically mention Click Wrap contracts. However, they are implicitly recognised due to their adherence to basic contract principles. Under Section 10 of the Act, a contract is valid if it involves free consent, lawful consideration, lawful objects, and competent parties, all of which are characteristics of Click Wrap contracts.



Noteworthy Case Law: Specht v. Netscape Communications Corp.

While Indian jurisprudence lacks specific cases on Click Wrap contracts, global instances offer valuable insights. In Specht v. Netscape Communications Corp., the US court ruled that for a Click Wrap contract to be enforceable, the user must be adequately notified of the terms and conditions. This case emphasises the importance of clear and conspicuous disclosure in Click Wrap contracts, a principle applicable in the Indian context as well.



Defining Shrink Wrap Contracts

A Shrink Wrap contract is a type of agreement typically associated with packaged software. The contract terms are enclosed within the software's packaging, and the contract becomes enforceable when the consumer opens the package or installs the software. These contracts derive their name from the shrink wrap plastic that commonly encapsulates new software.



Shrink Wrap Contracts under Indian Law

Like Click Wrap contracts, Shrink Wrap contracts aren't explicitly addressed in the Indian Contract Act, 1872. Nevertheless, they're implicitly acknowledged given their adherence to fundamental contract tenets. However, enforcing Shrink Wrap contracts in India can be more complex due to issues surrounding the visibility and acceptance of terms.



Key Case Law: ProCD, Inc. v. Zeidenberg

This US case is a cornerstone in the discourse around Shrink Wrap contracts. The court ruled that Shrink Wrap contracts are valid and enforceable, even if the consumer doesn't have an opportunity to review the terms before purchase. The principle inferred from this case could be relevant to Indian courts while addressing similar issues.



Implications and Challenges

Both Click Wrap and Shrink Wrap contracts pose some significant legal challenges:

  1. Consent: These contracts often come with a presumption of consent, raising questions about 'unfair contract terms' and 'unconscionability'.

  2. Jurisdictional Issues: Given the global nature of the internet, determining jurisdiction can be problematic.

  3. Violation of Privacy: These contracts often include clauses that could potentially infringe on users' privacy rights.


Final Thoughts: Click Wrap and Shrink Wrap Contracts in Indian IT Law

Click Wrap and Shrink Wrap contracts represent a shift in contractual relationships in the age of digital commerce. Although they streamline transactions, they also pose significant legal and ethical challenges. While Indian IT Law does not explicitly address these contracts, they are implicitly recognised and enforced according to the principles of the Indian Contract Act, 1872.


The growing prevalence of such contracts underscores the need for explicit legislation and clear judicial guidelines. As Indian digital commerce evolves, legal understanding and regulation of these contracts will play a crucial role in shaping the landscape.

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