Online Terms & Conditions in California: Click-Wrap and Beyond

Not all online agreements are created equal – California courts have drawn increasingly sharp lines about what will actually hold up in litigation. Learn more here. 

If your business operates a website, mobile app, or e-commerce platform, you almost certainly rely on some form of online agreement to establish terms of service, arbitration clauses, privacy policies, or class action waivers with your users. But not all online agreements are created equal, and California courts have drawn increasingly sharp lines about which ones will actually hold up in litigation.

The stakes are real. If your online terms are unenforceable, that carefully drafted arbitration provision, forum selection clause, or liability limitation may be worth nothing more than the pixels it is displayed on. 

Here is what California businesses and their counsel need to know:

The Statutory Foundation: California’s UETA

California’s adoption of the Uniform Electronic Transactions Act (Civ. Code, §§ 1633.1–1633.17) provides the statutory backbone for electronic contracting. Under Civil Code section 1633.7, a record or signature may not be denied legal effect or enforceability solely because it is in electronic form, and a contract may not be denied enforceability solely because an electronic record was used in its formation. (Civ. Code, § 1633.7, subds. (a)–(b).) 

An electronic signature, defined as “an electronic sound, symbol, or process attached to or logically associated with an electronic record and executed or adopted by a person with the intent to sign” (Civ. Code, § 1633.2, subd. (h)), carries the same weight as a handwritten signature.

But UETA does not override the basic requirements of contract formation. Mutual assent remains the touchstone. As the Court of Appeal has explained, California courts apply traditional principles of contract law to online agreements, and “mutual manifestation of assent, whether by written or spoken word or by conduct, is the touchstone of contract.” (Sellers v. JustAnswer LLC (2021) 73 Cal.App.5th 444, 461.)

The Four Types of “Wrap” Agreements

California courts now recognize four categories of online agreement, each classified by the manner in which the user purportedly manifests assent. (Sellers v. JustAnswer LLC, supra, 73 Cal.App.5th at p. 463.) Understanding where your agreement falls on this spectrum is critical.

Clickwrap: The Gold Standard

A clickwrap agreement requires the user to click an “I agree” or “I accept” button, typically with a link to the full terms readily available. (Sellers v. JustAnswer LLC, supra, 73 Cal.App.5th at p. 463.) Courts have routinely found clickwrap agreements enforceable because the user takes affirmative action that unambiguously manifests assent. The logic is straightforward: by requiring an overt act of acceptance before the user can proceed, the website provides both notice and an opportunity to review the terms.

However, recent authority cautions that the clickwrap label alone is not a guarantee of enforceability. In Herzog v. Superior Court (2024) 101 Cal.App.5th 1280, the Court of Appeal declined to enforce an arbitration provision in a healthcare app’s terms of service, even though users clicked an “I agree to Terms of Use” checkbox. 

The problem was context: the surrounding screen focused on privacy and data collection, creating ambiguity about what the user was actually agreeing to. The court held that “merely categorizing the purported agreement as a clickwrap does not resolve the formation question.” (Herzog v. Superior Court, supra, 101 Cal.App.5th at p. 1295.) The lesson is that even a true clickwrap can fail if the interface undermines the clarity of the user’s assent.

Scrollwrap: Maximum Protection

A scrollwrap agreement goes a step further, presenting the user with the entire agreement in a scrollable text box and requiring the user to scroll to the bottom before the “I agree” button becomes active. (Sellers v. JustAnswer LLC, supra, 73 Cal.App.5th at p. 463.) 

This format provides the highest degree of notice because the user must at least pass through the full terms before signifying acceptance. California courts have consistently treated scrollwrap agreements as enforceable. (Id. at p. 466.)

Sign-In Wrap: The Gray Zone

A sign-in wrap agreement notifies the user, typically through text near a “sign up” or “continue” button, that proceeding constitutes acceptance of separately hyperlinked terms. The user is not required to check a box or click “I agree” to the terms specifically. (Sellers v. JustAnswer LLC, supra, 73 Cal.App.5th at p. 463.) 

The enforceability of sign-in wrap agreements is heavily fact-dependent, turning on the conspicuousness of the notice and the transactional context.

In Sellers itself, the Court of Appeal found JustAnswer’s sign-in wrap unenforceable where the textual notice appeared in extremely small print below the “Start my trial” button and was not immediately adjacent to the action the user was required to take. (Sellers v. JustAnswer LLC, supra, 73 Cal.App.5th at pp. 479–481.) The court emphasized that “the onus must be on website owners to put users on notice of the terms to which they wish to bind consumers.” (Id. at p. 471.)

By contrast, in B.D. v. Blizzard Entertainment, Inc. (2022) 76 Cal.App.5th 931, the same appellate district enforced a sign-in wrap agreement for an online video game, finding that the transactional context, a continuing relationship in which the user would reasonably expect terms and conditions, combined with conspicuous warnings and a scrollable text box containing the full agreement, was sufficient. (B.D. v. Blizzard Entertainment, Inc., supra, 76 Cal.App.5th at pp. 951–957.)

The takeaway: transactional context matters. When the consumer reasonably expects to enter into an ongoing contractual relationship, as with a subscription service or online gaming platform, courts are more willing to find sign-in wrap agreements enforceable.

When the transaction is a one-off purchase or free trial, the bar for conspicuousness is significantly higher. (Sellers v. JustAnswer LLC, supra, 73 Cal.App.5th at pp. 476–477.)

Browsewrap: Virtually Unenforceable

A browsewrap agreement purports to bind the user simply by virtue of browsing the website, with terms accessible only through an inconspicuous hyperlink, often buried in the page footer. (Sellers v. JustAnswer LLC, supra, 73 Cal.App.5th at p. 463.) California courts have reached a clear consensus: browsewrap agreements are generally unenforceable. (Id. at p. 466; Long v. Provide Commerce, Inc. (2016) 245 Cal.App.4th 855, 866–867.)

In Weeks v. Interactive Life Forms, LLC (2024) 100 Cal.App.5th 1077, the Court of Appeal reaffirmed this position in no uncertain terms, holding that visiting a website, without any indicia of affirmative consent to its terms of use, is insufficient to create a binding agreement to arbitrate. (Weeks v. Interactive Life Forms, LLC, supra, 100 Cal.App.5th at pp. 1085–1087.) 

The court also rejected the argument that the Federal Arbitration Act preempts California’s browsewrap jurisprudence, reasoning that the state’s contract formation rules do not discriminate against arbitration but apply equally to all contractual obligations. (Id. at pp. 1091–1094.)

Key Design Principles for Enforceable Online Agreements

Drawing from the case law, a few practical principles emerge for businesses seeking to maximize the enforceability of their online terms under California law.

First, require affirmative assent. Use a clickwrap or scrollwrap mechanism that requires the user to take a clear, unambiguous action, such as checking a box or clicking an “I agree” button, before they can proceed. Do not rely on passive browsing or ambiguous “continue” buttons.

Second, make the notice conspicuous. If you use hyperlinked terms (as most sign-in wraps do), ensure the text referencing those terms is prominently displayed in a legible font size, in contrasting color, and immediately adjacent to the button or checkbox the user must click. The Ninth Circuit has observed that blue hyperlinked text in a sentence otherwise using gray text, placed next to the required checkbox, on an uncluttered screen, satisfies the conspicuousness requirement. (Berman v. Freedom Financial Network, LLC (9th Cir. 2022) 30 F.4th 849, 856–857.)

Third, avoid ambiguity about what the user is agreeing to. As Herzog demonstrates, surrounding context matters. If the same screen solicits consent for data sharing and also references terms of service containing an arbitration clause, a court may find that the user’s click did not unambiguously signify assent to arbitration. (Herzog v. Superior Court, supra, 101 Cal.App.5th at pp. 1298–1299.)

Fourth, consider the transactional context. Sign-in wrap agreements are more defensible where the user is entering into a continuing relationship and would reasonably expect to be bound by terms. For one-off purchases or free trials, a true clickwrap is the safer approach. (B.D. v. Blizzard Entertainment, Inc., supra, 76 Cal.App.5th at pp. 954–955.)

Fifth, preserve evidence. Maintain records of the user flow, screenshots of the interface, timestamps, and logs confirming that the user completed the assent process. The party seeking to enforce the agreement bears the burden of demonstrating that the user had reasonably conspicuous notice and manifested assent. (Sellers v. JustAnswer LLC, supra, 73 Cal.App.5th at p. 461.)

The Unconscionability Backstop

Even where a valid agreement exists, California law provides an additional layer of protection through the doctrine of unconscionability. Under Civil Code section 1670.5, a court may refuse to enforce a contract or any clause it finds unconscionable. 

The analysis has two components: procedural unconscionability, which looks to oppression or surprise arising from unequal bargaining power, and substantive unconscionability, which examines whether the terms are overly harsh or one-sided. (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 246.) Both elements must be present, but they operate on a sliding scale: the more procedurally unconscionable the agreement, the less substantive unconscionability is required, and vice versa. (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114.)

Online adhesion contracts, by their nature, typically satisfy the procedural prong. The substantive inquiry then becomes critical, particularly with respect to arbitration clauses containing class action waivers, one-sided fee-shifting provisions, or unreasonable limitations periods.

Looking Ahead

California’s online contracting law continues to develop rapidly. The courts have not yet articulated a bright-line rule for sign-in wrap agreements, and the California Supreme Court has not directly addressed the enforceability framework that the Courts of Appeal have constructed. 

What remains clear is that the old assumption that users implicitly agree to whatever terms a website posts is no longer viable. California courts expect businesses to earn their users’ assent through clear notice and unambiguous action, not to bury it in fine print.

For businesses operating in the California market, the time to audit your online agreement flow is now — not after a court declines to enforce your arbitration clause.

Thomas F. Gallagher is a California attorney and Managing Partner of Gallagher Krich APC, a San Diego-based litigation and business law firm. He can be reached at tom@tomgallagherlaw.com or (858) 926-5797.

This article is for informational purposes only and does not constitute legal advice. The information provided may not apply to your specific situation, and you should consult with a qualified attorney regarding your particular circumstances.