The following is provided for educational purposes, and should not be construed as legal advice.
Are shrink wrap/click wrap licenses enforceable in the United Kingdom?
In a recent study of laws in the United Kingdom, it appears that a valid enforceable contract can be formed through email, fax, or other means even when there is no physical or digital signature. Generally in the United Kingdom, contracts can be made without formalities.
Whether the terms of a shrink wrap/click wrap license are enforceable depend on the governing law. Should a United States manufacturer decide to use the laws of a state in the United States as the governing law in shrink wrap/click wrap license agreements, courts in the United Kingdom might not override the illegality of foreign laws as long as the choice of law is upheld. It is usually enforceable to impose non-English law in a business-to-business context where the parties are sophisticated enough to bargain for their own interests.
As to some of the provisions that may not be enforceable in a shrink wrap/click wrap license, the United Kingdom Unfair Contracts Terms Act (the “Act”) limits the level of warranties and exclusions a manufacturer can impose on End Users in a license agreement. The Act only applies to English law contracts. Non-English law agreements are usually enforceable as long as the terms are universal (i.e. the terms are the same throughout the world for ease of business operations rather than to evade the Act). If a court finds an evasion of the Act, the court will sever all the unreasonable terms from the agreement, such as the selling of products “as is” without any warranties. In case of such an event, a manufacturer might consider provisions in its shrink wrap/click wrap agreement that limit the company’s liability or damages.
Another provision of concern involves the right of return. Allowing the return of products creates a revenue recognition issue for a manufacturer. In England, not allowing a right of return is generally enforceable, unless it is a consumer product. The agreement will include a provision allowing for prompt return of the product if the End User does not agree to the terms of the shrink wrap/click wrap license agreement.
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