Shrinkwrap License Agreements: New Light on a Vexing Problem

Computer software companies rely widely on the use of shrinkwrap license agreements. Previous decisions have called into question the general enforceability of these agreements as contracts of adhesion, and the enforceability of specific provisions under policies of federal supremacy. This article analyzes the implications of a more recent decision, Step-Saver Data Systems, Inc. v. Wyse Technology, which focused on the rules of contract formation under the U.C.C. and their application when deciding if a shrinkwrap license governs a transaction at all. The analysis of the case calls into question the legal efficacy of many widespread marketing practices currently used in the software industry with respect to shrinkwrap licenses. This article makes recommendations for altering the process by which shrinkwrap transactions are concluded to increase the likelihood that the shrinkwrap license will govern the transaction