A Federal court in Nevada has ruled that because users weren't forced to click through Zappos' terms of service agreement, the company's terms are invalid. The ruling is the result of a lawsuit regarding an unfortunate security breach at Zappos -- one where 24 million accounts were compromised by hackers.
The court's primary issues with Zappos' ToS were its inaccessibility and the company's unenforceable claim it could amend the contract whenever it wanted. Unfortunately, many other websites employ the same tactics.
Source: court ruling
Browsewrap agreements are essentially implied contracts that don't force users to interact with or view their enclosed terms. Such agreements are sometimes considered legally binding, but only if users can be reasoned to have "constructive knowledge" of the terms therein -- the ability to discover and understand the contract by taking reasonable care, performing their share of due diligence.
Clickwrap agreements, alternatively, require users interact with the contract. This often involves walking users through blobs of legalese by forcing them to scroll, click through pages or simply confirm they've read and agree to the terms before they can continue. Apple's nearly 50-page long iOS App Store agreement is an infamous example of a perfectly executed clickwrap contract.
If Zappos had chosen to do a clickwrap agreement instead of browserwrap, the court would have likely ruled the company's ToS as valid. Such a decision
Prominent Internet law professor Eric Goldman shares his opinion here, warning webmasters to avoid potentially perilous browserwrap agreements by always requiring users to click and agree to something. In his blog post, Goldman also offers other tips on making online service agreements effective.
Zappos is own by Amazon. The Internet giant purchased the footwear-focused e-tailer in 2009.
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