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Schrödinger's EULA?

Part good-humoured protest, part reductio argument, engineer Anne Loucks' invention which enables her cat to accept pre-installation software EULAs provides a convenient perspective from which to examine whether now ubiquitous click-wrap end-user agreements are binding and enforceable in Australian law.

A starting point is a contractual analysis of the click-wrap agreement. The click-wrap is an offer, by the software vendor, to licence the software on certain terms.

A party offering to contract can specify how their offer may be accepted. The vendor is entitled, therefore, to say that a potential licensee of the software can accept the licence terms, as a contract, by clicking an "I accept" button during software installation.

A party offering to contract is also entitled to waive notification of acceptance of their offer where it would be unreasonable of the offeror to rely on the absence of a comunication which would have been superfluous or which no reasonable person would expect to be made. Arguably, this is the case here. It would not be objectively sensible for software users, particularly of low-cost commodity software, to contact the vendor each time the software is installed.

(However, it is also increasingly the case that click-wrap licensed software will, at the time the licence is accepted, communicate the fact of the acceptance and installation back to the vendor using, for example, the licensee's internet connection. In those circumstances, the acceptance has in fact been communicated, though not necessarily the identity of the licensee.)

There are also some cases which indicate that there must be a public act of acceptance, not merely privately "making one's mind up" (or, for example, putting a letter into a drawer to accept a contract), though public conduct in performing the contract can be such acceptance. Particularly where there is communication back to the vendor, this requirement is probably made out in this case.

Secondly, there is no basis in Australian law to suggest that Simba the cat, rather than Ms Loucks, is the contracting party in the transaction. It is trite to say that animals do not have legal personality under Australian law, and cannot enter contracts.

The question therefore becomes, does Ms Loucks' invention amount to her accepting the relevant contract by her conduct. The answer is, in these circumstances, probably yes. The mechanism was deliberately designed to cause the "accept" button to be pressed. It cannot be said that the button was pressed randomly, or without intention on the part of Ms Loucks that it be pressed.

Williams v America Online, Inc, was class-action litigation against AOL for damage caused to plaintiffs' computers during a software installation process. The evidence was that the installation damage was caused before the licence terms were displayed. In that case, it was held that AOL could not rely on the limitation of liability terms in the click-wrap contract, because they were only presented to the user after the damage was done.

It should also be noted that, if the licence is not accepted, a user may not have any right to install or use the software, and its installation would be an infringement of the vendor's copyright. In order to avoid the licence terms, but still have the benefit of running the software, the licensee would not only need to show the click-wrap licence was not effective, but that another licence existed, entitling the software to be used in any case.

Patrick Sefton
Brightline Lawyers
21 February 2009
Do not rely on these notes—obtain specific legal advice.