By "electronic contracting," I assume you mean the process of entering
into contracts electronically, with manifestation of assent done via a
"click" versus an actual ink signature? If that's the case, then I
think the most important impact to business will be the increased
efficiencies and lower costs businesses incur by abrogating the
infrastructure necessary to process and maintain thousands of physical
paper contracts. Imagine a company that sells widgets, and
historically it obtained a written contract of sale from each
customer. If now that manufacturer simply needs to place an
electronic form on its website and ask customers to click on "I Agree"
instead of actually dealing with a piece of paper and an ink
signature, the efficiencies garnered are obvious.
Legally, the stage is set to move forward with online contracting.
The most notable example is E-SIGN. The Electronic Signatures in
Global and National Commerce Act ("E-SIGN") (Pub. L No. 106-229, 114
Stat. 464 (2000), Senate Bill 761 [106th Congress] codified at 15
U.S.C. §§ 7001-7006, 7021, 7031) was signed by President Clinton on
June 30, 2000, and went into effect on October 1, 2000. The Act
establishes baseline rules to facilitate the nationwide use of
electronic signatures, contracts and records in commercial
transactions. Basically, the Act says that you cannot challenge the
validity of most contracts simply because they were executed
electronically.
The enforceability of online contracts has also been the subject of
many court cases recently, and the good news (if you like online
contracting) is that they have generally been held to be enforceable.
It has been held that online contractual provisions will be enforced
given evidence that party against whom enforcement is sought actively
manifested assent to the terms by clicking on an ?I Agree? or similar
button before proceeding. See Register.com v. Verio, Inc., (S.D.N.Y.,
No. 00 Civ. 5747 (BSJ), December 8, 2000 [2000 U.S. Dist. LEXIS
18846]); Specht v. Netscape, 150 F. Supp. 2d 585 (S.D.N.Y. 2001),
aff'd. -- F.3d -- (2d Cir., Oct. 1, 2002); Forrest v. Verizon, 805
A.2d 1007 (D.C. Cir. 2002). This same rationale may extend to
language in an online form that says, effectively, ?if you proceed and
use our services you are bound to the terms and conditions of our
contract.? This type of language is referred to as ?browseware,?
since no formal ?click? is required?-one is deemed to have accepted by
continuing to browse the site after confronting the subject terms and
conditions. Generally, an affirmative manifestation is preferred over
the browseware model, however.
Moreover, the cases have clearly evolved to follow traditional
notions of offer, acceptance and consideration and to give weight to
classic contract formation defenses, most notably adhesion and
unconscionability. See, e.g., Comb v. PayPal, 218 F. Supp.2d 1165
(N.D. Cal. 2002) (arbitration and venue clauses in online contract
held to be unenforceable as unconscionable); Williams v. America
Online, Inc., (00-0962, Massachusetts Superior Court, Middlesex
County, February 2001, Judge Margaret R. Hinkle) (venue selection
clause in AOL?s online contract requiring Virginia as the exclusive
venue held not to warrant dismissal of action filed in Massachusetts
when plaintiff had not received full and fair opportunity to see
online contract terms before clicking on ?I Agree.?); Softman v. Adobe
(CV 00-04161 DDP [AJWx], C.D. Cal., October 22, 2001) (Softman not
bound to terms of end-user shrink-wrap license due to lack of assent).
Thus, the best way to form a valid, binding online contract is to:
· Make sure it cannot be avoided, e.g., that a user cannot proceed
without affirmatively and volitionally clicking on ?I Agree.?
· Make sure that all parts of the agreement are visible to the end
user before he confronts the ?I Agree? button.
· Make sure that the end user is permitted to return the goods or
unsubscribe to the services if the end user determines to reject the
online contract.
· Understand that arbitration, forum selection and choice of law
clauses are closely scrutinized under traditional notions of
unconscionability, and plan accordingly.
· Use clear CONSPICUOUS language, such as:
THIS IS AN AGREEMENT BETWEEN YOU (?YOU? OR ?THE LICENSEE?) AND
________________________ [SOFTWARE COMPANY OR VENDOR] (?LICENSOR?).
BY CLICKING ON THE ?I ACCEPT? BUTTON, YOU AGREE TO THE TERMS SET FORTH
IN THIS [END USER LICENSE AGREEMENT] (?AGREEMENT?). IT IS IMPORTANT
THAT YOU READ THIS ENTIRE AGREEMENT BEFORE CLICKING ON ?I ACCEPT.? IF
YOU DO NOT AGREE TO THESE TERMS, PLEASE DO NOT CLICK ON ?I ACCEPT? AND
DO NOT DOWNLOAD OR USE THE SOFTWARE (AS DEFINED HEREIN) OR DO NOT
PROCEED WITHIN THE SITE. IF YOU DO NOT AGREE WITH THESE TERMS, YOU
MAY RETURN THE SOFTWARE FOR A FULL REFUND. YOU ARE ENCOURAGED TO
PRINT THIS AGREEMENT NOW SO THAT YOU MAY REVIEW IT BEFORE PROCEEDING
AND SO THAT YOU MAY HAVE A COPY FOR YOUR FILES. |
