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1

1
Introduction
Have you entered into a contract today?
Or rather, how many contracts have you entered into today? If you are like me,
you have agreed to the terms of a contract several times today. I entered into a con-
tract with my bank when I went online to pay a bill. I entered into a contract with
my e-mail service provider when I sent an e-mail to a friend. I entered into a contract
when I purchased a song from a digital music retailer. I entered into all of these con-
tracts without even uncapping a pen.
My experience is not atypical, yet when I ask my law or business school students
whether they have entered into any contracts in the past week, few raise their hands.
When I ask those who do raise their hands what kind of contracts they have entered
into, they usually tell me that they signed a lease for an apartment, or a loan agree-
ment for a car, or some paperwork for a student loan. Occasionally, one of my busi-
ness school students will have signed a commercial contract.
But when I ask whether they have checked their online banking account, or
downloaded sofware or music, or posted to their Facebook or Twitter accounts that
week, nearly every hand in the room goes up.
Ten you have all entered into a contract, I say, pausing for dramatic efect.
But have they really ? And if so, how to explain this disconnect between per-
ception and reality? Is it possible for someone to enter into a contract and not
know it?
Source: "Wrap Contracts: Foundations and Ramifications" Nancy S. Kim, 2013. Published by Oxford University Press
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2 Wrap Contracts: Foundations and Ramifcations
Te answers to the frst two questions are complicated, and this book devotes many
of its pages to them. Te answer to the third question is more straightforward: Yes.
As strange as it may seem, under contract law you can legally bind yourself with-
out knowing it. Tis is especially true online. Sometimes online agreements require
that a user click using a computer mouse on an I agree icon, but clicking doesnt
register in many peoples minds the same way that signing on a dotted line does.
Ofen, you dont even have to click to be bound. In many cases, you can be deemed
to have entered into a contract simply by visiting a website.
How is that possible? And how did we get here?
When most consumers think of contracts, they think of a multipage document
with fne print that they sign when they want to rent a car, apply for a credit card, or
enroll in a cell phone plan. Tey may think that in order for a contract to be legally
binding, it needs to look like a legal document. In other words, a contract, in their
minds, should be typed, dated, and signed by both parties. It should contain legalese
and unnecessary words such as wherefore and henceforth.
But they are wrong. A contract generally does not need to be signed by both par-
ties in order to be legally enforceable. In fact, barring a few exceptions (e.g., personal
guaranties, contracts for the sale of goods $500 or more, contracts for the sale of real
property, and a few others), a contract does not even need to be in writing in order
to be enforceable.
To be sure, many contracts are printed up on nice paper and signed by both par-
ties and too many of them contain unnecessary words and legal mumbo jumbo.
But ofen contracts, even when written, do not announce themselves on legal-size
paper, nor do they arrive under wax and seal. Sometimes they sneak into the trans-
action unnoticed, slipping into the consumers hands afer money has already been
exchanged. Sometimes they simply hang out on the edges of a website, outftted
in a modest hyperlink to mask the unsightly terms contained within. Even when
an agreement precedes the transaction, consumers feel powerless to negotiate
standard form contract terms. To these consumers, it makes no diference whether
the terms come before or afer the transaction because the terms are ofered on
a take-it-or-leave-it basis. Tese contracts are known as contracts of adhesion.
Tis book is primarily concerned with a certain type of contract of adhesionwrap
contracts.
So what is a wrap contract anyway? Tis book uses wrap contract as a blanket
term to refer to a unilaterally imposed set of terms which the drafer purports to be
legally binding and which is presented to the nondrafing party in a nontraditional
format. Nontraditional in this context means that the contracting form wasnt com-
monly used prior to 1980 and includes electronic media and of ine mediums. Te
single common characteristic is that the adhering party does not have to use a pen
Source: "Wrap Contracts: Foundations and Ramifications" Nancy S. Kim, 2013. Published by Oxford University Press
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Introduction 3
in order to accept the terms. (Under a federal law, Electronic Signatures in Global
and National Commerce Act, known as ESIGN,
1
an electronic signature or contract
cannot be denied legal efect simply because it is in electronic form. In addition,
most states have adopted some version of the Uniform Electronic Transactions Act
known as UETA which also permits electronic contracting).
Wrap contracts include shrinkwraps, clickwraps, and browsewraps. Shrinkwraps
are pieces of paper wrapped in plastic wrap that come with sofware compact discs.
Clickwrap and browsewrap agreements are digital and can be found on nearly every
website. A clickwrap requires clicking with a computer mouse on a box or icon that
says, I agree, or something similar, whereas a browsewrap requires no af rmative
act and is accessible via a hyperlink, typically located at the bottom of the home page
and identifed with wording such as Terms of Use. Other forms of wrap contracts
have started to emerge. Tapwraps pop up on mobile devices such as smart phones
and require a tap of the fnger rather than a click of the mouse to indicate accept-
ance. Tis author recently encountered a ripwrap when her new laptop arrived in
a plastic bag with legal terms on a sticker which were deemed accepted by tear-
ing open the sticker (which was required to open the bag containing the laptop).
It seems there are as many ways to present contract terms as the imagination and
technology allow.
Which may lead you to wonder: Given that many of the problems pertaining to
wrap contracts also apply to other types of consumer contracts, is there any need
to distinguish wrap from other contracts? Is there a diference between online and
of ine, traditional and nontraditional standard form contracts? Negotiating or
bargaining disparities exist with both wrap and other standard form contracts.
2

Consumers routinely accept the terms of both written and digital agreements
without bothering to read their terms. Some commentators even speculate that the
electronic contracting environment may be a better one for consumers than the of-
line one for several reasons. Tey argue that consumers have access to information
about a companys contract on its website.
3
Tey note that time pressures may be
1
Pub. L. No. 106-229, 114 Stat. 464 (2000) (codifed at 15 U.S.C. 7001 et seq .).
2
Juliet Moringiello and William Reynolds, for example, argue that contract law is malleable enough to address
electronic contracting issues. See Juliet M. Moringiello & William L. Reynolds, From Lord Coke to Internet
Privacy: Te Past, Present and Future of Electronic Contracting , 72 Md. L. Rev. 542 (2013).
3
Christina L. Kunz, John E. Ottaviani, Elaine D. Zif, Juliet M. Moringiello, Kathleen M. Porter, & Jennifer
C. Debrow, Browse-Wrap Agreements: Validity of Implied Assent in Electronic Form Agreement , 59 Bus. Law
279, 290 (2003) (noting that in an electronic setting, a Web site can be designed to provide a customer with
detailed information about the contractual terms through the use of Frequently Asked Questions (FAQ) pages
or by providing a method of contacting the Web site provider with questions.).

Source: "Wrap Contracts: Foundations and Ramifications" Nancy S. Kim, 2013. Published by Oxford University Press
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4 Wrap Contracts: Foundations and Ramifcations
diminished when the user is shopping from home.
4
Te user can comparison shop
and interrupt online transactions more readily than of ine ones.
5

Why then devote a book to the subject of wrap contracts in particular, rather than
mass consumer contracts generally?
Wrap contracts are diferent from paper contracts in both their form and the envi-
ronment in which they are presented. Tis book explains how businesses, courts and
technology create a coercive contracting environment where one-sided legal terms
are imposed upon non-drafing parties who literally have no choice but to accept
them if they wish to participate in modern society. It also explains how contracting
form (i.e. digital or paper) signifcantly alters the behavior of contracting parties,
which in turn creates seismic shifs in both methods of contracting and the sub-
stance of the contract itself. Wrap contracts are insidiously shaping the development
of online activity by, for example, legitimating privacy-eroding practices.
6

Furthermore, what happens online doesnt stay online. As our online and of ine
worlds merge, and as products become more digital and less tangible, contracting
practices that were tolerable in the context in which they originated become much
more ominous. As consumers become acclimated to clicking, they are made to do
so in physical spaces and for transactions which were formerly free of contracts. A
consumer now can walk into an Apple store, have the Genius salesclerk charge her
credit card, and then be required to accept the terms of Apples agreement on her
new iPad before being allowed to take possession of it. Perhaps even more troubling,
of ine and online contracting methods can be used in a way that aggravates cer-
tain legal burdens on consumers. For example, one court held that a consumer was
bound by the terms of an online agreement because she had received a notice in the
mail that the terms were available online.
7

Te problem with wrap contracts is not solely their novel forms and their aggres-
sive terms; it is also the stale formalism that rationalizes them. In a society where
contracts are ubiquitous, do traditional doctrinal rules make sense? How can con-
tract law balance the needs of an evolving marketplace with the realities of consumer
behavior?
Modern contracts befuddle critics who view them through the prism of traditional
contract doctrine. Others argue that mass consumer contracts are not contracts at all
4
Id . at 15.
5
Id .
6
Tis book examines many provisions from actual contracts which were current as of the date indicated in the
associated footnotes. But given the ease and frequency with which digital contracts are updated, the terms of
the cited contracts may have changed. Similarly, some of the associated issues in this fast moving area may have
changed due to legislative reform eforts and regulatory action.
7
Brice o v. Sprint Spectrum, 911 So.2d 176, 180 (Fla. Dist. Ct. App. 3d Dist. 2005).

Source: "Wrap Contracts: Foundations and Ramifications" Nancy S. Kim, 2013. Published by Oxford University Press
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Introduction 5
because they lack a critical doctrinal requirement, such as consideration or ofer and
acceptance. Some argue that even if these contracts are validly formed, they should
not be enforceable because they are contrary to public policy.
Wrap contracts have their defenders, too. Tey argue in favor of innovative con-
tracting forms, such as browsewraps or clickwraps, sometimes on the grounds of
autonomy but more ofen economic ef ciency. In doing so, these defenders narrowly
rivet their attention on ways that wrap contracts are similar to traditional contracts
and blithely overlook the many ways in which they are not.
In this book, I explain why traditional contract law is insuf cient to address mod-
ern contracting needs. Te rigid rules of traditional contract law simply ignore the
reality of modern day transactions. Realizing the limits of playing by formalistic
rules, courts have twisted contract doctrine to uphold certain agreements that made
sense given a particular business environment. Unfortunately, they did not limit the
applicability of the doctrine to those business environments. Te result is undesir-
able and harmful legal precedent that shifs the balance of power away from con-
sumers and toward businesses, which now have the ability to set and shape norms
through their contracting methods.
In the dynamic online and mobile computing environment the aggressive prac-
tices of businessesaccomplished in large part through wrap contractsthreaten
to reshape societal norms and values such as privacy and property ownership. Social
change is inevitable and ofen desirable but process matters. Where the change
occurs organically and through the desires of a population, it represents the progress
of a civilization; on the other hand, where it is instigated by self-interested businesses
without the approval or awareness of the massesthrough the vehicle of stealth
contractsit refects coercion and exploitation.
Te frst half of this book explores the diferences between wrap and other con-
tracts, lays out the foundations for wrap agreements, and traces their origin, rise,
and infuence. Te second half of this book focuses on the social and legal ramifca-
tions of using wrap contracts, and concludes that while a specialized body of law is
unnecessary, doctrinal adjustments should be made to address the problem of wrap
contracts. Tese adjustments reallocate the balance of burdens on the parties by rec-
ognizing contracting realities such as the power of the drafer to present terms and
the futility of shopping for alternative terms.

Source: "Wrap Contracts: Foundations and Ramifications" Nancy S. Kim, 2013. Published by Oxford University Press