Do you know those agreements on Websites, which no one reads, but on which we all click, “I agree?” Those agreements are called clickwrap agreements, terms and conditions, and site user agreements. They all serve a similar purpose. The term “clickwrap” has evolved from the word “shrinkwrap” which describes the agreements in shrunken font size that are often wrapped around software disk boxes or envelopes.
A contract is an agreement between two parties. The parties can agree to almost anything that isn’t illegal. So in a clickwrap agreement, you can set forth all the possible restrictions on the use of your Website, and the purchase of products or services through it. You can lower your business risks by limiting your liability for things that you might be sued for, and you can accomplish other helpful objectives, such as waiving warranties that are implied by law into the purchase of products, and choosing the location for litigating disputes.
The law generally presumes that everyone has the capacity to contract. Parties to an agreement must have contractual capacity before the agreement will be binding on both parties. Contractual capacity is the ability to understand that a contract is being made and to understand its general nature. The fact that a person does not fully understand the meaning and all ramifications of a contract does not mean that the person lacks contractual capacity. But if a party does lack capacity, then the contract is usually avoidable (or voidable) and the party without capacity may avoid the contract.
Some classes of persons such as people under the age of 21, or in most states, under the age of 18, are deemed by law to lack contractual capacity. People under 18 are considered to be minors. With some exceptions, a contract made by a minor is voidable. The minor, in other words, may avoid the legal liability under a contract. Upon reaching the age of majority, a minor may affirm or ratify the contract and therefore make it contractually binding on him. Any expression of the minor’s intention to avoid the contract will accomplish avoidance. Because of this age issue, you may want to restrict the use of your site to persons over 18.
You must also consider persons in other countries. Keep in mind that there is a good chance that you will not be able to get a foreigner into court in the U.S. Also, if you’re sued abroad by a user, the foreign judicial system may not uphold the U.S. contract, and may apply their own law instead — even if the contract says that U.S. law applies. Keep in mind that US law restricts us from doing business with certain countries like Cuba, Iraq, Syria and others — in fact, it’s illegal to do business with some of them. Having persons in these nations make purchases or download software from your Website would almost certainly be considered “doing business” with these countries. It’s also considered exporting, which is in some cases completely prohibited, while in others, it just requires an export license.