Indiana Law Journal
Copyright (c) 2000 Trustees of Indiana University
Fall, 2000; 75 Ind. L.J. 1125
Humans, Computers, and Binding Commitment
Addison C. Harris Lecture, October 26, 1999
Margaret Jane Radin
(William Benjamin Scott & Luna M. Scott Professor
of Law and Co-Director of the Program in Law, Science & Technology,
Stanford Law School.)
Copyright 2000 by Margaret Jane Radin. Permission is hereby granted to reproduce
and distribute this Article in whole or in part for personal, professional
or educational purposes, provided such copies are disseminated at or below
cost, provided that each copy bears this notice, and provided that the Indiana
Law Journal is credited as the original published source.
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A. Precursors of "Click-Wrap" Contracts
Website presentation of terms is analogous in certain significant respects
to what [*1134] is known as a shrink-wrap license, usually used
in software distribution. (That, of course, is where the term "click-wrap"
comes from.) There are two different species of shrink-wrap license. In the
first kind, the terms are presented before purchase of the software, on the
box or plastic shrink-wrap that covers the box. The seller maintains (and
hopes) that when you break the shrink-wrap, it signifies that you have agreed
to the terms and a license contract is formed. In the second kind of shrink-
wrap license, the terms are not presented to you before you buy; instead,
the outside of the box informs you that there are terms inside that you will
see later (perhaps on the screen when you run the software) and that you
will be bound to them if you use the software. The contract-as-product model
describes both procedures, especially the second.
Primarily because courts remain committed to the ordinary language view of
contract-as-consent, the legal validity of shrink-wrap licenses-that is,
whether or not presentation of terms in this way causes a contract to be
formed-remains in doubt. n20 ProCD, Inc. v. Zeidenberg, n21 written
by an economist judge who is friendly to the contract-as-product model, has
become well-known for validating a shrink-wrap license of the second kind.
In that case, ProCD's product was a CD containing a telephone-number database.
A purported contract that appeared on the screen when the program was run
prohibited users from copying the database. If valid, this was a contractual
extension of ProCD's rights under copyright law, since, under U.S. copyright
law, databases are not protected if they are "unoriginal." n22 Zeidenberg,
the defendant, relied on copyright law to copy the database; ProCD relied
on contract law to argue that he could not.
Although the terms were not seen by the buyer before he purchased the product,
Judge Easterbrook held that the contract was validly formed as long as two
conditions were met: (1) something on the outside of the box warned the consumer
that terms were inside, and (2) the consumer could return the product for
a refund after seeing the additional terms. n23 Although ProCD has
become an influential case, especially among software publishers, another
judge in another jurisdiction might have held otherwise in this case (as
some have in other cases); n24 and what will happen in future cases,
if the matter is left up to the courts, is by no means certain.
A website that shows you its terms and says, "If you click in this box you
have agreed to my terms," under circumstances in which the website is programmed
so that you will not be allowed to use the site if you do not, is somewhat
analogous to a shrink-wrap license of the first kind. The website is programmed
so that the click signifying "agreement" is required before you can use the
site; similarly, you will not get to use shrink-wrapped software if you do
not signify "agreement" by breaking the shrink-wrap. Some websites, such
as eBay, are presenting their terms this way. Although they are somewhat
analogous to shrink-wrap of the first kind, the analogy does not go all the
way. For one thing, it is no doubt easier to read terms that [*1135]
are presented to you on your computer screen than to read the terms on a
shrink- wrapped package while you are in the store deciding whether to purchase
it. Also, it will be easier for you to retain a copy of the terms from the
website, since you can copy them and print them out, whereas if the terms
are actually on the shrink-wrap, they will be hard to read after you break
be somewhat analogous to a shrink-wrap contract of the second kind. That
kind of shrink- wrap tells you on the outside only that there are binding
are many websites that do this. n25 A website like this is analogous
to shrink-wrap of the second kind only if we interpret its silence as saying
to the user, "By continuing to use this site you are bound to a set of terms
which you will only see if you choose to click on them." Under this interpretation
it is analogous to becoming bound to further terms inside the box (or on
the first screen). But the interpretation stretches things; silence is in
fact not the same thing as alerting you that further terms await you inside.
Also detracting from the analogy is the fact that with software purchase
the terms usually show themselves to you, and in the website case you must
affirmatively do something in order to see them. Recall also that even in
ProCD, where the judge was quite sympathetic to the shrink-wrap procedure,
a condition for its validity was that the user be able to unwind the deal
after viewing the terms (for example, by returning the product for a refund).
n26 For many digital contracts of this type it is rather difficult for the
consumer to return the product after viewing the terms. (A group of Linux
users who tried to return the Windows software (or operating system) found
that out. n27)
We should keep in mind the real world and the prevalence of the contract-as-
product model in practice, even if many of us have not quite admitted that
to ourselves in our ordinary discourse about contract. In the offline world
there are a great many contracts in which the buyer does not see many of
the terms until after buying the product. We purchase a large range of items
(including shrink-wrapped software) over the telephone and have no opportunity
to see the fine print until shipment is received. Consumer product warranties
are often inside the box. In some classes of these contracts, such as the
fine-print inserts that come with my credit card bill once in awhile, new
terms are imposed at the seller's will from time to time. In all of these
contracts, it appears that the promisor must at least be given the option
of declining after the fact to be bound, by unwinding his or her initial
acceptance of the product (for example, ceasing to use the credit card).
It does not appear, though, that the option in practice is anything more
than theoretically possible. Even though I am a lawyer, and actually once
in awhile look at fine print (though not that often), I have [*1136]
never packed up and sent back something I bought over the telephone because
I did not like the fine print on the back of the invoice when it came. Do
you know anyone who has?
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n20 See, e.g., Mark A. Lemley, Intellectual Property and Shrinkwrap Licenses,
68 S. Cal. L. Rev. 1239 (1996).
n21 ProCD, Inc. v. Zeidenberg, 86 F.3d 1447 (7th Cir. 1996).
n22 See Feist Publications, Inc. v. Rural Tel. Serv., 499 U.S. 340 (1991).
n23 See ProCD, 86 F.3d at 1450.
n24 See, e.g., Step-Saver Data Sys., Inc. v. Wyse Technology, 939 F.2d 91
(3d Cir. 1991).
n25 See, e.g., Stanford Home Page (visited Feb. 2, 2000) <http://www.stanford.edu>.
n26 See ProCD, 86 F.3d at 1456.
n27 The Windows license told users that if they did not like the terms when
they saw them, they should return the software for a refund. A group of Linux
users divested their computers of Windows and attempted to obtain a refund.
Neither the store that sold them the software nor Microsoft thought it was
the appropriate party to fulfill the terms. Finally, the Linux users had
a demonstration outside Microsoft's office in the Bay Area. Reports said
it was a civilized demonstration in which Microsoft employees came out and
served them coffee and doughnuts. See, e.g., Wired News, Linux Users Shut
Their Windows ( v i s i t e d F e b . 9 , 2 0 0 0 ) < h t t p : //www.wired.com/news/technology/0,1282,17926.00.html>.