Author – Aman Tiwari
Co-Author – Sakshi Sahu
College: Thakur Ramnarayan College of Law
Abstract –
Software-as-a-service(SaaS) providers in India rely on online terms that users accept by pressing an “I agree” button (clickwrap) or by continuing to use a website that links to the terms (browsewrap). No Indian statute sets formation rules for either technique, and the published scholarship reports no Indian decision that rules directly on whether browsewrap binds. This paper asks whether the existing law is adequate for SaaS subscriptions. It uses a doctrinal method, supported by comparative material from the United States and the European Union and by empirical studies of how people read online terms. The paper finds that clickwrap can satisfy the Indian Contract Act, 1872 when notice and a chance to read are real, and that browsewrap is unlikely to meet the same standard. Formation is only half the problem: Indian courts lack a dependable way to review unfair standard terms, particularly where the customer is a business. The paper proposes a short statutory rule on electronic assent, a route for reviewing unfair standard terms, and design practices that providers can adopt now.
Keywords: clickwrap; browsewrap; SaaS; standard-form contracts; electronic assent; Indian Contract Act
I. Introduction
A company that signs up for a SaaS product rarely negotiates anything. It lands on a sign-up page, presses a button, and the provider’s standard terms govern the relationship from then on. Those terms settle who can be sued and where, how much the provider can be made to pay, and whether the provider may change the deal later. Two techniques dominate the way providers obtain assent. In a clickwrap agreement, the user must take a visible step, usually pressing “I agree” or ticking a box, before going further. In a browsewrap agreement, the terms sit behind a hyperlink, often in a page footer, and the provider treats continued use of the site as acceptance.
Indian law has no statute written for either technique. Whether a given SaaS agreement binds depends on the general rules of the Indian Contract Act, 1872, read with the Information Technology Act, 2000. Writers who have examined the Indian position describe a patchwork and report that Indian courts have not squarely decided whether a browsewrap agreements binds a user. A provider drafting its terms, and a customer reading them, both work without settled authority.
This paper examines whether the present law is adequate for clickwrap and browsewrap agreements in SaaS contracting. It asks four questions
- Does India’s legal framework give reliable rules for these agreements?
- How do Indian courts approach electronic assent when no case speaks to the point directly?
- What minimum level of affirmative assent should separate an enforceable agreement from an unenforceable one?
- What reforms would close the gaps that remain?
The argument is that the label on an agreement matters less than what the interface does. Clickwrap is the safer form in India because it produces an identifiable moment of acceptance, but a click is weak evidence that anyone agreed to terms they never read. Browsewrap has no such moment and is unlikely to satisfy the Contract Act’s requirements for offer and acceptance in most SaaS settings. Formation is also only part of the problem. Indian courts have no dependable way to review the content of standard digital terms, and the consumer statutes that might help do not reach most business customers. The paper closes with proposals for a short statutory rule on electronic assent, a route for reviewing unfair standard terms, and design practices that providers can adopt now.
II. METHOD AND SCOPE
The study is doctrinal. It reads the statutes that bear on electronic contracting in India, the Law Commission’s reports on unfair terms, and the Supreme Court decisions on standard-form and electronic contracts, and it asks what follows from them for SaaS subscriptions. Comparative material comes from the United States and European Union, which have developed the most explicit rules on how online terms must be presented. Evidence on user behaviour comes from published empirical studies.
The paper covers clickwrap and browsewrap only. Shrinkwrap licences raise their own formation questions and are left aside. It treats SaaS subscription as a mix of consumer and business transactions, because many Indian customers are small businesses and the legal consequences differ for each group. Because no Indian decision speaks to browsewrap directly, the conclusions about Indian courts rest on analogy and are provisional. Part X returns to this and other limits.
III. ASSENT, NOTICE, AND THE LIMITS OF THE CLICK
- The tests
Contract law asks whether a reasonable observer would take a party’s conduct as agreement. Conduct counts as assent only if the person intended to act and knew, or had reason to know, that the other side might read the act as agreement. Online, the question becomes whether the user had enough notice of the terms, and enough chance to read them, that clicking or merely browsing can fairly be read as acceptance.
Two formulations organize much of the discussion. Kunz and her co-authors propose four elements for implied assent: adequate notice that the term exist, a meaningful chance to review them, adequate notice that a specified action signals assent, and the user’s taking that action. Russ would drop the clickwrap and browsewrap labels and asks three questions instead: did the presentation give reasonable notice of the terms, did the user have a fair opportunity to read them, and did the user expressly manifest assent to those terms. Both reduce the taxonomy to the same ingredients. Clickwrap usually satisfies the last two Kunz elements by design. Browsewrap usually does not, and its first two elements are often doubtful as well.
- United States authority
American courts show how the tests work in practice. In Specht v. Netscape Communications Corp., the Second Circuit refused to bind users who downloaded software when the licence terms were visible only to someone who scrolled below the downloaded button. In Register.com, Inc. v. Verio, Inc., the same court bound a party that had repeatedly queried a database after seeing the terms each time, which supplied the knowledge missing in Specht. In Nguyen v. Barnes & Noble Inc., the Ninth Circuit declined to enforce an arbitration clause reached only through a link at the foot of each page, because the user had neither actual knowledge of the terms nor conspicuous notice of them. Mozingo reads the line of cases as inconsistently applied and argues for a rule that online terms bind only when the user clearly and unambiguously manifests assent.
- Is notice the same as consent?
Not everyone accepts that notice can stand in for consent. Radin argues that courts reason as though knowing that a list of terms exist were the same as accepting them, and that this substitution departs from the theory that justifies enforcing contracts at all. Feldman, responding to Kar and Radin, argues that courts understand the technological changes in contracting and that those changes have not altered basic contract principles. The disagreement matters for India, whose courts inherit the common-law starting point. If notice may substitute for assent, the quality of the notice carries the whole weight of enforceability. If Radun is right, even good notice leaves a gap that only review of the terms themselves can fill. Part VII returns to that gap.
IV. The Indian Position
- Formation and electronic contracts
The Contract Act treats a proposal that has been accepted as a promise, treats an agreement enforceable by law as a contract, and requires free consent from competent parties. It says nothing about how acceptance must be shown online. The Information Technology Act gives electronic records and electronic signatures legal recognition, and it provides that a contract is not unenforceable solely because proposals and acceptances were expressed electronically. The Supreme Court applied that logic in Trimex International FZE ltd. V. Vedanta Aluminium ltd., holding that an exchange of emails had produced a binding contract. A party relying on an electronic record must still prove it, and that is now governed by Bhartiya Sakshya Adhiniyam, 2023, which replaced the Indian Evidence Act, 1872.
These provisions remove an objection to the medium. They do not say what makes an electronic act count as assent. A click on a button and a link in page footer are both electronic, and section 10A treats neither as invalid for that reason alone. Whether either amounts to acceptance is left to the general law.
- Consumer and data protection statutes
The Consumer Protection Act, 2019 defines a consumer to include a person who buys goods or services online. It also defines an “unfair contract” and lets the State and National Commissions declare unfair terms void. Two limits matter here. The definition excludes a person who buys for resale or a commercial purpose, so a company buying a SaaS tool for its operations is generally outside the Act. And the Act’s list of unfair terms deals with matter such as excessive deposits, penalties, and termination without reasonable cause. It does not address whether a click or a link produced agreement in the first place. The Consumer Protection(E-Commerce) Rules, 2020 add disclosure duties for e-commerce entities, but a doctrinal study reports continuing problems with enforcement, consumer awareness and platform compliance.
The Digital Personal Data Protection Act, 2023 sets its own standards for personal data. Consent must be free, specific, informed, unconditional and unambiguous, given by a clear affirmative action, and as easy to withdraw as to give. The Rules were notified on 13th November 2025, and the Act’s obligations are being brought into force in stages. The Act governs the processing of personal data, not the formation of SaaS contract, but it matters for two reasons. Parliament has already required an affirmative act for data consent, which makes a browsewrap approach to data terms hard to defend. And providers will have to separate data consent from contract acceptance. Gupta and Naithani add that notice-and-consent systems often fail to give people real choices, a weakness they say is amplified in India by low digital literacy and low privacy awareness.
- Courts without a direct precedent
No Indian court appears to have ruled directly on whether a browsewrap agreement binds a user. Rawat and colleagues conclude that Indian courts have shown a willingness to enforce a digital contracts but that, without legislative guidance, uncertainty persists. Dubey and Verghese describe a case-to-case approach to clickwrap in India and contrast it with the more liberal American position. The question therefore reaches Indian Courts through other doctrines.
Tofaris explains how this works for unfair terms generally. Indian courts control onerous terms partly through legislation aimed at standard-form or consumer contracts, and partly indirectly, by using ordinary doctrines of formation, interpretation, and procedural fairness. Two Supreme Court decisions state the larger principle. In Central Inland Water Transport Corp. v. Brojo Nath Ganguly, the court held that courts will not enforce unfair and unreasonable terms imposed by a party with far greater bargaining power. In Life Insurance Corp. of India v. Consumer Education & Research Centre, the court accepted that standard-form terms can be reviewed on similar grounds. Both cases involved public bodies, which limits how far they help against a private SaaS provider, and Rawat and colleagues note that the principle has been applied inconsistently. Gulati and Sane’s study of financial consumer disputes points the same way. Courts often granted relief in banking cases, but in insurance cases they stressed contractual compliance even where the terms were opaques or unfair, and they awarded low compensation and took long to decide.
The law commission has twice proposed a statutory answer. Its 103rd report(1984) recommended a new chapter IV A and section 67A for the Contract Act, and its 199th report(2006) proposed a fuller bill on procedural and substantive unfairness. Neither proposal appears in the Act today, which is why courts still depend on the indirect doctrines Tofaris describes.
V. Is the Clickwrap-Browsewrap distinction enough for SaaS?
A. Clickwrap
A typical SaaS sign-up presents the terms before payment, either in a scrollable window or through a link beside the button, and asks the customer to press “I agree”. On the Contract Act’s terms that sequence fits well. The provider’s standard terms are the proposals, the click is the acceptance, and the subscription fee is the consideration. The click also gives the provider something it can prove, usually through a timestamped log. That is why clickwrap is the form most likely to be upheld in India, and the comparative literature says of other systems.
Clickwrap is not safe in every design. Enforcement turns on whether the earlier Kunz elements are met. A link is grey text under a large “Start free trial” button, a pre-ticked box, or terms that appear only after the account is created all weaken the argument that the user had notice or a chance to read. Russ’s observation that hybrid forms blur the classification is useful here, because when the test is notice, opportunity, and an express act of assent, the label adds little.
B. Browsewrap
Browsewrap fits poorly. The provider makes an offer by posting its terms, but the user does nothing that a reasonable person would read as acceptance. A provider might argue that using the service is performance of the proposal’s conditions, which the Contract Act treats as acceptance. Indian courts have long required, however, that a person accepting by performance knew of the proposal, and a user who never saw the terms did not. American courts reach the same result unless the user knew of the terms or the notice was conspicuous.
The “pay now, terms later” sequence makes matters worse. Where the terms first appear in a link after payment, the user cannot have accepted them when the contract was made, and a later hyperlink does not cure that without fresh assent.
C. What the label cannot do
Even a perfect clickwrap record shows only that someone clicked. It doesn’t show that anyone read, still less understood, what was accepted. The Contract Act’s free consent requirement concerns coercion, undue influence, fraud, misrepresentation and mistake. It does not ask whether the agreement was read, and Indian courts usually treat a signed or clicked agreement as binding whether or not it was read. Kumar argues that automated, algorithm-driven contracting strains the free consent doctrine further, and he suggests presumptions of informed consent and algorithmic transparency as responses. The first conclusion is therefore modest. Clickwrap is better than browsewrap and the labels helps providers predict risk. But a legal system that stops at the label leaves the question of notice, opportunity and fairness open.
VI. What users actually do
Cloud contracts are close to uniform. Lynn observes the most cloud customers accept standard-form clickwrap terms without any chance to negotiate and that few read them. European experience suggests that information duties alone do not solve this. Zok finds that the new category of digital-content contract and its information duties may not significantly improve consumer protection for cloud services.
Empirical studies explain why. In an experiment with 543 participants joining a fictitious social network, Obar and Oeldorf-Hirsch found that 74 percent skipped the privacy policy by choosing the quick join option. Participants who did see the terms of service spent an average of 51 seconds on them, against an expected 15 to 17 minutes and most agreed to both documents. Maronick’s two studies found that most respondents read very little of a software terms-of-service agreement, spending under a minute on documents that averaged over 6000 words, mainly because of their length and the low perceived payoff from reading. Marotta-Wurgler reviewing studies of software licence agreements, cautions that regulators should look for evidence of seller advantage-taking before imposing new duties, that some disclosure rules may simply be ineffective.
These studies come from other markets, and transferring them to India calls for care. Gupta and Naithani’s remark about digital literacy suggests the problem could be large here, but that is an inference, not a finding. Drobac and Goodenough make a wider point: the law presumes full adult capacity to consent, while research on attention and information overload shows that the presumption often fails. The practical lesson is that a rule which depends on users reading will not work. Reform should aim at what providers must do, not at what users are assumed to absorb.
VII. Unfair terms and the limits of transparency
Formation rules decide whether terms are part of the contract. They do not decide whether the terms are acceptable. Studies of online terms of service report recurring clause types: limits on liability, unilateral change of the service or contract, unilateral termination, content removal and mandatory arbitration, along with choice-of-law and jurisdiction clauses and “contract by using” provisions. Admiral and colleagues argue that formal consent mechanisms often hide structural imbalances of power, and they identify unilateral limits on liability, forced arbitration, unilateral modification and heavy exploitation of personal data as typical problems.
For Indian SaaS contracts the review options are less. The Contract Act has no general unfair terms rule and the Law Commission’s proposals were not adopted. The Consumer Protection Act’s power over unfair contracts applies to consumers, which leaves out most business subscribers. Courts can still use public policy and the indirect doctrines Tofaris describes, but those tools are uncertain and slow.
Hillman, writing about India, reached a similar view of the consumer position. He argued that the legal framework is inadequate to police unfair standard terms in internet contracts, and he proposed that vendors disclose their standard terms early, before a consumer starts a transaction, as the American Law Institute’s Principles of the Law of Software Contracts recommend. He accepted that early disclosure would probably not make consumers read more. He expected it to give rating services and watchdog groups better access to bad terms and to push vendors toward reasonable drafting.
Transparency has limits of its own. Nicholls found that in Australia courts and regulators concentrate on procedural fairness, so that once there was notice and a chance to read, the content of the terms mattered little. In Europe, Loos and Luzak identify several clauses types used by international online providers that are unlikely to pass the Directive’s fairness test, which indicates that a substantive test, and not disclosure alone, does the work. Luzak and colleagues document differences in national practice on the plain-language duty and conclude that traders, consumers, and enforcers need more certainty about what compliance requires. They recommend concrete, empirically motivated guidelines.
A reform limited to disclosure would hand providers a compliance checklist and leave courts no better placed to strike out a clause that is fully disclosed and plainly one- sided. A formation rule should therefore come with a separate route for substantive review.
VIII. Comparative lessons
The United States and the European Union handle electronic contracting differently, and neither model fits India without adjustment. In the United States, the Uniform Electronic Transactions Act and the federal E-SIGN Act give electronic records and signatures the same standing as paper, and courts decide the clickwrap and browsewrap questions case by case using the notice-and -assent cases discussed above. The European Union relies more on regulation. The Unfair Contract Terms Directive requires terms in plain, intelligible language (article 5) and supplies a fairness test (article 3), the Consumer Rights Directive adds pre- contract information duties, and the GDPR requires consent to be a clear affirmative act, with silence, pre-ticked boxes, and inactivity excluded.
Helberger and colleagues note that whether a presentation of terms suffices to produce a legal act receives different answers in different jurisdictions. Supangat and colleagues attribute part of the divergence to different regulatory philosophies: structured consumer protection in the European Union and an emphasis on freedom of contract in the United States. Indonesia, another jurisdiction without detailed rules, faces a similar problem. Subarkah and Gravionika conclude that the validity of clickwrap and browsewrap agreements is open to challenge under the principle of consensualism and call for clearer legal recognition and consumer protection.
What India can take from these systems is the logic, not the text. From the United States it can take the insistence on notice and a visible act of assent. From the European Union it can take the idea that fairness review should not depend on disclosure alone. It should not copy consumer-only rules wholesale, because a large share of the SaaS market is business-to-business and a bare transplant whole leave that share untouched. Rawat and colleagues likewise propose reform that draws on international practice while staying suited to the Indian setting.
IX . Recommendations
A. Parliament
First, Parliament should add a short provision on electronic standard terms, either to the Information Technology Act or to the Contract Act. It would provide that standard terms presented online bind a user only if they were shown before the user committed, the user took a recorded step identified as acceptance, and the full text was accessible and could be saved. Passive use of a website would not be enough. The provision follows the Kunz elements and matches the “clear affirmative action” standard the Data Protection Act already uses for personal data.
Second, the Law Commission’s unfair-terms proposals deserve fresh consideration, together with a decision on whether small businesses buying standard-form digital services should be covered. Third, standard terms should meet a readability requirement, with regulatory guidance on what plain language means in practice, as Luzak and colleagues recommend for Europe.
B.Courts and regulators
Courts should look past the labels and put the notice, opportunity, and assent questions to the facts of each interface, treating the provider’s logs and screenshots as evidence of what the user saw. Where a term is fully disclosed but harsh, the existing doctrine on unfair and unreasonable terms remains available, and Brojo Nath and Life Insurance Corp. supply the principle even though their facts concerned public bodies. Where consumers are involved, the Central Consumer Protection Authority and the consumer commissions can concentrate on interface design and enforcement, since the studies show that disclosure alone achieves little.
C. Providers
Providers need not wait for legislation. A clickwrap flow that shows the terms before payment, uses an unticked box or a clearly labelled button, places the full next to that button, and stores a timestamped record of the version accepted gives the strongest position under the tests above. Providers should also seek fresh assent when terms change in a material way, keep data consent screens separate from contract acceptance so that each meets its own standard and summarise the clauses most likely to surprise a customer, such as limits on liability, arbitration, jurisdiction, and unilateral change.
X. Limitations
Three limits should be stated. Because no Indian decision addresses browsewrap directly, the conclusion on Indian enforceability rest on analogy and could change with the first reported case. The evidence on reading behaviour comes from other countries. And the paper analyses the law and the literature, not a sample of actual SaaS agreements, so it does not measure how Indian providers present their terms.
XI. Conclusion
Indian law can already enforce a well presented clickwrap agreement, and it is unlikely to enforce a browsewrap agreement whose terms the user never saw. That answer settles the formation question but not wider one for SaaS contracting. A click does not show understanding, the consumer statutes miss most business customers, and the courts’ indirect tools for policing harsh terms are slow and uncertain. The proposals above address each gap: a formation rule that requires visible notice and a recorded act of assent, a route to review unfair standard terms, and design practices that providers can adopt immediately. Until a court rules directly on browsewrap, providers who rely on it carry a risk that clickwrap would remove.
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