How To Create a Shrink-Wrap Agreement With Ease
A shrink-wrap agreement is a common document that accompanies various products, especially software.
A shrink-wrap agreement is a boilerplate or license contract packaged with both software and hardware products. A boilerplate clause is a common provision found at the end of agreements to define obligatory terms and conditions.
In some cases, it is available as a file named license.txt or a similar document on the installation CD.
They contain extremely important provisions that pertain to putting your data at risk or compromising your intellectual property and causing potential losses.
Even though they are important for the company, most customers don’t bother reading these terms thoroughly, considering them non-negotiable, and accept them as they are.
Customers buy products covered in shrink wrap. If they have accepted the delivered product and intend to use it, it is assumed they have officially accepted the contract. The catch is that a customer is unable to read the terms and conditions until they’ve paid for the product or package, making these agreements somewhat controversial.
There are two other types of shrink-wrap agreements:
- Browser-wrap license—This happens when a user agrees to a license without actively accepting it. For example, when visiting a website, you agree to the terms and conditions of navigating the website
Shrink-wrap clauses or agreements are usually accompanied by an End-User License Agreement (EULA), a software license acting as a contract between the company and the software user. EULA sets limits of use and is effective immediately after the software purchase, even if the user hasn’t installed the software yet.
If you want to create a valid contract, there are four essential elements you should consider first:
- Offer—The seller needs to make an offer to the customer
- Acceptance—The customer accepts the offer
- Lawful consideration—An exchange of services for monetary or other assets as consideration
- Legal capability—Both parties must be above 18 and of sound mind
Although they do not have a mandatory format to follow, there are some elements common to all shrink-wrap agreements:
- Rights of use
- Limitation of liability
- Fees and payments
Whether shrink-wrap agreements are legally binding remains a debate. Some courts claim that the customer accepts the terms if they’ve paid for the product. Others debate that they can’t consent if they don’t know what the terms are until they remove the shrink wrap.
According to the majority, license terms are legally enforceable only if the terms are included in the purchase contract. The customer should make an informed decision before making the purchase.
Before you set out to draft a shrink-wrap agreement, consult with your lawyer to know your legal rights and obligations and protect your interests to the maximum.
If you don’t know how to draft legal documents, seeking professional legal help is your safest bet, but lawyers can be quite expensive. If you’re looking for a cheaper alternative, you can search for contract templates, but free templates tend to be outdated, with no option to adjust the contract to match your requirements.
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If you need other documents, explore our guides to writing various agreements on your own, including:
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- Arbitration agreements
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