Legal and Business Implications of Shrink-Wrap Agreements: Look Before You Click

Abstract

Shrink-wrap and click-wrap agreements are the fine print you see, among other things, when you click through terms and conditions in accessing an online service (e.g., in connection with a cloud computing service) or as part of the installation of a piece of software. They may also be encountered as part of the documentation provided with new software or a hardware component. They may even be found, with some searching, in a file entitled “license.txt” or similar name on the installation CD on which a new piece of software is delivered. Businesses seldom read these terms in any detail, generally view them as non-negotiable, and accept them as a necessary evil. The fact is, these types of agreements can present significant legal and business issues. They can place a business’ sensitive data at risk, expose the business to liability, compromise the business’ ownership of its own intellectual property, and cause the business to pay additional, unforeseen fees. This article discusses some of the key risks inherent in these types of transactions.

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