One-Click Consent: The Validity of a Clickwrap Agreement

Introduction
Contract law governs the legal rules relating to the formation and execution of agreements (Salim, 2019: 3). Essentially, an agreement (contract) is a legal relationship between two or more parties, which grants rights to one party and imposes obligations on another to perform a certain performance. The performance in a contract plays a crucial role in the legal relationship formed by the parties. Without it, any legal relationship arising from any juridical acts would hold no legal significance under contract law (Harahap, 1982: 6-7).

Under Indonesian law system, this principle is reflected in Article 1233 of the Indonesian Civil Code (“ICC”), which stipulates that “All contracts (perikatan) arise from an agreement, or by law.” This provision confirms that a civil obligation or performance may legally arise from the mutual consent of the parties who intentionally establish a legal relationship. Once the parties have reached a consensus and satisfied the legal requirements for a valid agreement, a binding obligation arises that must be fulfilled in accordance with the law.

Along with the advancement of society and technology, the form of contracts has also evolved. One such development is the clickwrap agreement, which refers to the method of obtaining user consent in digital or online environments, where the contract is considered formed once the user clicking a button or icon marked signifying their consent for certain terms and conditions prior to accessing services the service provider offer. The increasing use of clickwrap agreement is largely due its practicality and the ease it offers service providers in securing user consent.

While this approach offers convenience and efficiency for both parties, it also presents certain challenges. On one hand, this convenience increases the effectiveness for the service provider to obtain consent from its users. While on the other, the simplicity of a single-click contract, often results in users neglecting to read or fully comprehend the terms and conditions provided. As a result, when dispute arise, people begin challenging the validity of such contract, questioning whether consent obtained so easily can be considered as binding as that in conventional contracts. This issue has led to concerns regarding the binding legal force of clickwrap agreements and whether they truly reflect an informed and voluntary consent.

Discussion
The term clickwrap refers to the method of obtaining consent in digital or online environments, where an agreement is considered formed once the user consents by clicking a button or icon marked “I Agree” or “I Accept,” provided by the service provider. This process reflects the user’s acceptance of the stipulated terms without requiring physical presence or a handwritten signature, as in conventional contracts.

To date, the term clickwrap agreement has not been specifically used or regulated under Indonesian law.  However, as a form of electronic contract, it is subject to the provisions regarding electronic contracts under Indonesian Law. Electronic contracts are regulated through Law No. 1 of 2024 on the Second Amendment to Law No. 11 of 2008 on Electronic Information and Transactions (“ITE Law”). An electronic contract means an agreement made through electronic systems. Concerning the aspects of its validity, Article 18 paragraph (1) of the ITE Law affirms that electronic transactions that are stated in electronic contracts shall bind on parties.

As a contract, the application of clickwrap agreement must also subject to the conditions on the validity of contracts under the ICC. Consequently, the clickwrap agreement remains valid and binding on the parties, provided that it meets the valid conditions set out in Article 1320 of the ICC. These stipulations in the ICC are also reflected in the regulation related to the validity conditions of electronic contracts stipulated in Article 46 paragraph (2) of Government Regulation Number 71 of 2019 on the Organization of Electronic System and Transaction (“GR 71/2019”), which stipulates that:

       “An Electronic Contract shall be deemed valid if:

1. there is an agreement between the parties;
2. is conducted by a legal subject which is capable or authorized to represent in accordance with laws and regulations;
3. there are certain matters; and
4. transaction object must not contradict with laws and regulations, decency, and public order.”

However, as mentioned before, one of the main issues that arising from the use of clickwrap agreements is when it is considered as binding. This came with the fact that, clickwrap agreements are typically presented in the form of standard contracts. In the same way as a conventional standard contracts, clickwrap agreements do not provide users with an opportunity to negotiate the terms set by the service provider. That conditions causes a ‘take it or leave it’ situation, where users have no choice but to accept all predetermined terms in order to access the service offered.

Furthermore, as this form of contract has become increasingly common in online and digital practices, the majority of users tend to accept the agreement without thoroughly reading or understanding its contents. In fact, many users may not realize that through a single click, they have entered into a legal relationship, forming a binding contract with the service provider.

This is why, when disputes occur, users might challenge the validity of clickwrap agreements, even though they may have technically given their consent. Accordingly, such an issue raises the question of what aspects, in the context of electronic contracts such as clickwrap agreements, actually determine whether the user’s consent has been validly established? In order to analyze this matter, relevant case studies will be discussed below.

1. Indonesian Legal Cases
   While through various court decision in Indonesia, such specific matter has not yet been thoroughly addressed, there are several cases that may be considered in determining the existence of a clickwrap agreement and the aspects that indicate the user in giving their consent.
   1. Medan High Court Decision No. 142/Pdt/2019/PT MDN
      In the Medan High Court Decision No. 142/Pdt/2019/PT MDN jo. District Court of Medan Decision No. 268/Pdt.G/2018/PN Mdn, one of the issues arises was whether the electronic contract, specifically the dispute resolution clause stipulated in the online registration, is binding. In this case, the Plaintiff/Appellant had priorly filed a lawsuit through the Medan District Court on the basis of an alleged unlawful act committed by the Defendants/Respondents. However, the Medan District Court,  granted the Defendants/Respondents exception, ruled that the Medan District Court lacked the authority to hear the case, due to the dispute resolution clause, which required the matter to be resolved through the South Jakarta District Court, as stipulated in the online registration agreement clause on the Defendants/Respondents website.It was also established that the Plaintiff/Appellant had independently selected the dispute resolution forum during the online registration process, having been provided with appropriate options between Badan Arbitrase Perdagangan Berjangka Komoditi (BAKTI) or the South Jakarta District Court. The Plaintiff/Appellant choose the South Jakarta District Court, by clicking the corresponding option, during the online registration.

      Regarding the existence of the electronic contract itself, the Panel of Judges noted that the continued transactions made by the Plaintiff/Appellant, specifically, the repeated deposits made by the Plaintiff/Appellant demonstrated an agreement to proceed with the activities, which should be understood as consent to the terms of the electronic contract. The Panel of Judges also emphasized that it would be highly unusual for transactions involving such significant sums of money to occur without a binding agreement, as this would leave the rights and obligations of the parties undefined.

      The repeated deposits made by the online applicant demonstrated an agreement to proceed with the activities, which should be understood as consent to the terms of the electronic contract.

      The terms and condition presented during the online registration in this case, is what might constitute as a clickwrap agreement even though the legal case does not provide its detailed information. Although the Plaintiff/Appellant claimed to have been unaware of the agreement at the time of registration and only became aware of its contents once the dispute arose, the Panel of Judges at the first level court held that the Plaintiff/Appellant had voluntarily completed the online registration process. Consequently, the court ruled that the Plaintiff/Appellant’s choice of the South Jakarta District Court as the dispute resolution forum constituted a self-selected option. This choice, therefore, must be respected as legally binding by all parties, including the court

   2. Medan High Court Decision No. 567/Pdt/2019/PT MDN
      Furthermore, in the Medan High Court Decision No. 567/Pdt/2019/PT MDN jo. District Court of Medan Decision No. 464/Pdt.G/2018/PN Mdn, the Plaintiff/Appellant argued that the participation in the electronic contract with the Defendants/Respondents was not legally binding, as they were unaware of the nature of the electronic contract. The Plaintiff/Appellant claimed that the Defendants/Respondents were having a limited understanding over the internet and services Defendants/Respondents offered. The Plaintiff/Appellant emphasized that the existence of the so-called electronic contract was merely a deceptive construct intentionally created by the Defendants/Respondents. Further, claimed that they were never informed of, nor did they ever consent to, the existence of such a contract.In response, the Defendants/Respondents argued that the Plaintiff/Appellant had consented to the electronic agreement by checking the box indicating acceptance of the electronic documents and contract provided. The Defendants/Respondents further emphasized that the electronic contract clearly stated that it will bind, as evidenced by the written warning provided as follows, “ATTENTION! THIS AGREEMENT IS A LEGAL CONTRACT. PLEASE READ CAREFULLY.”

      Regarding this matter, the Panel of Judges in the first and second level of court stated that the electronic agreement had indeed been agreed upon. This conclusion was supported by the fact that the Plaintiff/Appellant had also fulfilled their obligations by transferring a sum of money, indicating their agreement to the terms stipulated between parties. Therefore, the Panel of Judges concluded that the electronic contract has met the validity requirements set forth in the Article 1320 of the ICC, and thus the principle under Article 1338 of the ICC shall also be applied, where all legally executed agreements shall bind the individuals who have concluded them by law.

      Considering the two decisions provided above, both might be seen as reference whether a clickwrap agreement has been made and binding to the parties. While neither decision specifically addressed the issue of whether a single click suffices to establish consent, both decisions gave significant weight to the action or repeated actions after the online registration was made. In other words, such actions may also be interpreted as a tangible manifestation of the user’s expression of will and consent to the electronic contract. And when the electronic contract was considered to have been already made, its contents are binding to the parties.

      Both Indonesian court decisions gave significant weight to the action or repeated actions after the online registration was made.

2. Foreign Court Decision
   Unlike in Indonesia, in various foreign court decisions, the issue regarding the legal force of clickwrap agreements and whether they truly reflect informed and voluntary consent has been fairly established. This matter can be compared to with the following cases.
   1. Feldman v. Google, Inc. (2007)
      In Feldman v. Google, Inc. (2007), Feldman sued Google regarding the fees charged in Google AdWords, arguing that the fees were higher than he had anticipated. Feldman claimed that he could not be said to be bound by the terms and conditions contained in the clickwrap agreement given by Google when he signed up to the service provided by Google. Feldman further argued that there was never a meeting of minds between the two parties, therefore the online contract that had to be clicked before being able to place an advert on Google AdWords was unenforceable. Nonetheless, the judgement ruled that the clickwrap agreement remained valid and binding from the moment Feldman clicked the acknowledgement, indicating explicit consent to the contract. The court held that the terms listed in the clickwrap agreement constitutes as a binding agreement with Google, as the clickwrap agreement has given sufficient notice to the user. The court further argued that in the preamble, which was immediately visible, it was also made clear that assent to the terms was binding in nature.
      Feldman v. Google, Inc. demonstrates that a consent on the part of the user can still be considered fulfilled and legally binding, even when consent is given only through the act of clicking the available consent box (clickwrap).

   2. Sgouros v. TransUnion Corp. (2016)
      In contrast, in Sgouros v. TransUnion Corp. (2016), the court ruled that the arbitration clause in the terms and conditions set by TransUnion Corp was not enforceable. In this case, Sgouros, as a user, did indeed click to agree when conducting a transaction on TransUnion’s website. However, the court held that there was no valid agreement to the arbitration clause because Sgouros was never given reasonable notice by TransUnion Corp. that by clicking “agree,” the user was agreeing to the terms and conditions, including the arbitration clause. The court further stated that the contract contents were considered hidden and did not clearly state that clicking meant agreeing to the service. Additionally, the TransUnion website also did not warn the user that by completing a purchase he would be bound by the terms. As the overall contract content, including the disputed arbitration clause, displayed only a small amount of text, providing no opportunity for the user to give an informed and explicit consent.When comparing to the decisions in the two foreign cases provided above, Feldman v. Google, Inc. demonstrates that a consent on the part of the user can still be considered fulfilled and legally binding, even when consent is given only through the act of clicking the available consent box (clickwrap). This came with the fact that Google, as the service provider, has proven to have provided adequate information regarding the nature of the clickwrap agreement and the actions to be taken by the user.

      While in Sgouros v. TransUnion Corp., the court held that consent given by simply clicking cannot automatically be considered valid if the user was not fully informed. The consent in this case, where supposedly given by the user (Sgouros) by clicking to agree, was based on ignorance. The service provider (Trans Union Corp.) had failed to adequately inform the user about the clickwrap agreement, including its binding nature, and whether the information provided was clear enough for the user to understand that they would be bound by the terms and conditions presented in the clickwrap agreement. Hence, the key to consider whether the clickwrap agreement is valid or not is whehter an adequate information has been provided to the buyer or customer and the buyer or customer is aware that by clicking the “agree” button, he or she will be bound by the terms and conditions as provided.

      In Sgouros v. TransUnion Corp., the court held that consent given by simply clicking cannot automatically be considered valid if the user was not fully informed.

      With respect to providing clear information in electronic contracts, under Indonesian law, such matter can be referred to the Article 48 of GR 71/2019, where it stipulates that business actors offering products through electronic systems must provide complete and accurate information regarding the contract terms, the producer, and the offered products. In addition, business actors are also obliged to provide clarity of information regarding the contract offer or advertisement. These provisions are essentially in line with the legal rule provided by the two foreign cases outlined above.

Closing
The development of information technology has brought various changes and developments to the form and mechanism of contract formation, including through clickwrap agreement, which has been more commonly used. In the context of Indonesian law, this form of contract can be recognized as valid, as long as it fulfils and refers to the valid conditions of a contract as stipulated in the Indonesian Civil Code and ITE Law as well as GR 71/2019.

From the foreign cases provided above, there are several crucial elements to assess whether a clickwrap agreement will be valid or not, namely, (i) a sufficient notice has been given to the user of the terms and conditions of an agreement and (ii) it was made clear that an assent to the terms and conditions will be binding in nature. These important elements are in line with Article 48 of GR 71/2019. Further, from Indonesian legal cases, one other element is added, namely an action or repeated actions of transactions constitute one’s consent to the terms and conditions provided when applying online.

Miskah Banafsaj

Sources:

• Indonesian Civil Code.
• Law No. 1 of 2024 on the Second Amendment to Law No. 11 of 2008 on Electronic Information and Transactions
• Government Regulation No. 71 of 2019 on the Electronic Systems and Transactions Operation.
• Feldman v. Google Inc. 2007.
• Sgouros v. TransUnion Corp. 2016.
• Medan High Court Decision No. 567/Pdt/2019/PT MDN.
• Medan High Court Decision No. 567/Pdt/2019/PT MDN.
• Medan District Court Decision No. 268/Pdt.G/2018/PN Mdn.
• Harahap, Yahya. 1980. Segi-Segi Hukum Perjanjian. Bandung: Alumni, 1982.
• S, Salim H. 2019. Hukum Kontrak (Teori dan Penyusunan Kontrak).
• Gatt, Adam. 2002. Electronic Commerce Clik-Wrap Agreements. Computer Law & Security Report. Vol. 18. No. 6. 404 – 410.
• Oakley, Robert L. 2005. Fairness in Electronic Contracting: Minimum Standards for Non-Negotiated Contracts. Houston Law Review, Vol 42. No. 4. 1041 – 1105.