Clickwrap and Clarity: Are Online Terms Binding Without Transparency?

Introduction

Following on from my earlier article discussing a U.S. case involving Disney+ and the retrospective enforcement of digital terms and conditions, similar questions are now surfacing closer to home. Recent Australian case law has examined the extent to which website users and consumers are bound by online terms, particularly when those terms are not immediately visible or are only accessible via hyperlinks.

In this article, I will explore how courts have treated online agreements where terms are either hidden behind a link, accepted by ticking a checkbox, or simply implied. This article also seeks to highlight the importance of transparency in digital contracting and obligations of a website owner in ensuring they are not hiding their terms and making it difficult for users to read about what they are signing up for.

When a click becomes a Contract

Whether we’re signing up to social media platforms, subscribing to streaming services, or buying goods online, we're often asked to accept “terms and conditions.” Most users don’t read them—but does that mean they’re not enforceable?

The legal question is not just whether the terms exist, but whether they’ve been presented in a way that legally binds the user. Courts are increasingly weighing whether users are given sufficient notice and opportunity to review terms, and whether the method of acceptance—such as ticking a checkbox—is clear, fair, and transparent.

Recent Court decisions

Case: Gispac Pty Ltd v Michael Hill Jeweller (Australia) Pty Ltd [2024]

This case involved a dispute over a long-term supply contract. In 2014, a Michael Hill employee signed an agreement for the future supply of carry bags from Gispac, which included a checkbox confirming agreement to terms and conditions available via a hyperlink.

It was later admitted that the employee never opened or reviewed the linked terms. These terms included minimum purchase requirements, penalties for shortfalls, and automatic renewal clauses—renewing the contract every 24 months unless notice was given six months prior to expiry.

The court found that:

• The employee knew he was agreeing to terms and conditions by ticking the checkbox;
• The terms were expressly referenced and available via a hyperlink;
• There was no concealment or ambiguity by Gispac in making the terms available; and
• The employee made no effort to read or seek advice on the terms, despite being clearly alerted to them.

The court held that the terms were incorporated by reference and therefore binding, regardless of whether the employee read them. The key takeaway of this case is that if a person expressly agrees to terms, they are bound, even if they never read them.

Case 2: Dialogue Consulting Pty Ltd v Instagram [2020] FCA 1846

This case explored the enforceability of online contracts; more specifically, whether an arbitration clause in Instagram’s terms and conditions (that was accessible via a hyperlink from its sign-in page) was valid. Dialogue argued that Instagram's arbitration clause was invalid as their online contract with Instagram was not enforceable, and therefore the clause was not binding.

The court considered whether simply clicking a digital button, or continuing to use a platform, constituted acceptance of binding terms. In this, the court evaluated the enforceability of various types of online agreements typically employed in other US online agreements:

• Clickwrap: where the user must click “I agree” after being shown or linked to the terms.
• Browsewrap: Terms are linked or referenced, but no active consent is required.
• Sign-in wrap: Users are informed that by signing in or continuing use, they are agreeing to terms linked nearby.

The court found that Instagram used a sign-in wrap agreement, where the user was provided with a link to the terms and therefore were asked to interact with the terms in some way. In this case, the interaction was via a sign-in button. The court stated that such an agreement would provide the user with a “legitimate opportunity to learn that his or her use is subject to terms of use, even if the person does not take the opportunity”. The court went on to say that a reasonable user would know that by clicking the registration button, he was agreeing to the terms and conditions accessible via the hyperlink, whether he clicked on the hyperlink or not.

Instagram’s online contract was therefore held to be enforceable.

Click, Sign In , or Scroll - What Counts as Agreement?

The Dialogue case highlights one form of online agreement, yet there are several common ones to consider.  Each of them generally brings about varying amounts of enforceability that is often dependent on how clearly the user is made aware of them.

Clickwrap Agreements

• The user must actively click a button or checkbox indicating agreement
• Terms are either shown directly or made available via link.
• Considered highly enforceable due to the clear action of consent.

Sign-in Wrap Agreements

• The user is informed that signing in or continuing use indicates agreement to linked terms.
• While there is no checkbox like the clickwrap agreements, it still requires user interaction.
• Courts assess whether there was reasonable notice of the terms.

Browsewrap Agreements

• Terms are simply linked on the website
• No active consent is required; typically enclosing in a link to their terms on their website, by saying something like “Use of this website is subject to our Terms of Use [link].”
• Often less enforceable unless users are clearly and prominently notified.

As a general rule of thumb, the more interactive and visible the terms, the more enforceable they are.

Need help with a Contract Review or Contractual Dispute?

The recent cases reinforce that courts expect users—especially in commercial contexts—to take reasonable steps to understand what they’re agreeing to. While website owners should make terms transparent and accessible, there is still an onus on the user to review them when they are clearly provided.

Contact our Disputes & Litigation team

Have you been asked to sign an online agreement you don’t fully understand? Or are you unsure whether a contract you accepted online is enforceable and want to understand next steps?

Our experienced teams in litigation and commercial law at Sharrock Pitman Legal can:

• Review digital agreements before you sign them;
• Advise on whether you're legally bound by past online consents;
• Assist in resolving disputes around unclear or unfair contract terms’ and
• Draft terms and conditions for in supply and services contracts.

If we can assist you or your business, please do not hesitate to contact us on 1300 205 506 or by email at sp@sharrockpitman.com.au.

The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.

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