Shrink wrap contract - Definition and Overview

Shrink wrap contracts refer to license agreements or other terms and conditions of a (putatively) contractual nature which can only be read and accepted by the consumer after opening the product. The term describes the plastic wrapping used to coat software boxes, though these contracts are not limited to the software industry. Web-wrap, click-wrap and browse-wrap are related terms which refer to license agreements in software which is downloaded or used over the internet.

The legal status of shrink wrap contracts in the US is somewhat unclear. One line of cases follows ProCD v. Zeidenberg which held such contracts enforceable (eg. Brower v Gateway [1] (http://www.kentlaw.edu/legalaspects/tony_brower.htm)) and the other follows Klocek v. Gateway, Inc which found them unenforceable (eg. Specht v. Netscape Communications Corp. [2] (http://www.nysd.uscourts.gov/courtweb/pdf/D02NYSC/01-07482.PDF)). These decisions are split on the question of consent, with the former holding that only objective manifestation of consent is required while the latter require at least the possibility of subjective consent.

In April 2004, a ruling [3] (http://www.techfirm.com/bakeragreement.pdf) in California challenged the practice of including EULAs within shrink wrapped software. This forced major software companies and retailers, including Microsoft and Best Buy, to accept returns of opened software, and to provide EULAs on their website for consumers to read before committing to the software.

Example Usage of contract