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Online T&Cs – Will clicking “I Accept” without looking through the T&Cs legally bind you? 

How often have you browsed a website and when prompted to read the terms and conditions, you just click on the “I Accept” button without actually reading it? If you did not read the terms and conditions, would the terms still bind you?

Click Wrap Agreement

Where the user is required to click an icon on the website, usually an “I Accept” or a “Check the Box” link on a pop-up window, to indicate the user’s acceptance to the online terms and conditions, an electronic contract is formed. More commonly known as a “click wrap agreement”, it is typically used to bind consumers to terms and conditions that govern the consumers’ purchase and use of products or services from a website or mobile application.

In a click wrap agreement, the terms of the agreement are presented to the user and accompanied by a button labelled “I Accept”. A variation of the click wrap agreement requires the user to click on a hyperlink to read the full terms and conditions.

In Malaysia, the Electronic Commerce Act 2006 provides that contracts for commercial transactions can be formed electronically, and “commercial transactions” include transactions relating to the supply of goods or services.  While it is possible to form a contract electronically online, as with the formation of any other contracts, there must be an offer and clear and unequivocal acceptance of the offer.

In a click wrap agreement, as the terms of the contract are presented to the users (be it displayed immediately to the viewer or assessed through a hyperlink), it follows that upon clicking, the users have read, accepted and consented to the terms of the contract. The user’s affirmative action of clicking the “I Accept” button signifies the user’s clear acceptance to a contract formed electronically.

It is worthwhile to highlight that the users do have a duty to study the terms, and failure to read the terms of the contract does not release one from being bound by the contract (see United Overseas Bank (Malaysia) Bhd v Lee Yaw Lin & Anor [2016] 4 MLRA 69).

Browse Wrap Agreement

A browse wrap agreement is one where the terms of the agreement are not presented to the users. Unlike a click wrap agreement, a browse wrap agreement does not require the user to manifest their consent to the terms of the agreement through any affirmative conduct. Instead, the agreement binds the user by virtue of the user browsing the website or mobile application.

As mentioned, formation of a contract requires both an offer and a clear and unequivocal acceptance. When there is no affirmative action by the users to agree to the terms of the agreement other than the use of the website or mobile application, it could be debatable whether the user has indeed accepted the terms of the agreement, especially when terms are not displayed conspicuously to the users.

Shrink Wrap Agreement

A shrink wrap agreement is one where the contract only comes to the notice of the user when the product is received. Typically, the terms and conditions come with the packaging of the goods and certain shrink wrap agreements may go to the extent of providing that opening of the product will constitute acceptance of the terms.

Similar to browse wrap agreement, it is arguable whether a shrink wrap agreement is enforceable as the user doesn’t have notice of the terms of the agreement until he opens the package to view them. In other words, it is arguable whether there is any “clear and unequivocal acceptance” from the user to the terms of the contract.

Take-away points

  1. For businesses which wish to enforce the online terms and conditions, it is important to ensure that you provide your users with an avenue to read the terms of the agreement and for the users to signify their acceptance to the terms, for example by providing the “I Accept” or “Check the Box” button / link in the web page or mobile application.
  1. For users, do note that clicking on the “I Accept” button constitutes your acceptance to the online terms and conditions. Click at your own peril!

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This article was written by Shawn Ho and Ee Lyne Chong.  Shawn leads the corporate practice group of Donovan & Ho, and has been recognised as a Notable Practitioner, whilst the firm has been recognised as a Notable Firm for Corporate and M&A by Asialaw Profiles 2020.  We are also ranked a Recommended Firm by IFLR1000 for 2020.

 Our corporate practice group advises on corporate acquisitions, restructuring exercises, joint venture arrangements, shareholder agreements, employee share options and franchise businesses, Malaysia start-up founders and can assist with venture capital funds in Seed, Series A & B funding rounds.  Feel free to contact us if you have any queries.

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