I. Forming Contracts Online
Disputes arising from contracts entered into online concern the terms and assent to those terms.
A. Online Offers
Terms should be conspicuous and clearly spelled out. On a Web site, this can be done with a link to a separate page that contains the details. The text lists subjects that might be covered, including remedies, dispute settlement, payment, taxes, refund and return policies, disclaimers, and privacy policies. An online offer should also include a mechanism by which an offeree can affirmatively indicate assent (such as an “I agree” box to click on).
1. Click-On Agreements
A click-on agreement occurs when a buyer, completing a transaction on a computer, is required to indicate his or her assent to be bound by the terms of an offer by clicking on a button that says, for example, “I agree.” The terms may appear on a Web site through which a buyer is obtaining goods or services, or they may appear on a computer screen when software is loaded.
2. Shrink-wrap Agreements
A shrink-wrap agreement is an agreement whose terms are expressed inside a box in which computer hardware or software is packaged. In most cases, the agreement is not between a seller and a buyer, but between a manufacturer and the user of the product. The terms generally concern warranties, remedies, and other issues associated with the use of the product. • Courts often enforce shrink-wrap agreements, reasoning that the seller proposed an offer that the buyer accepted after an opportunity to read the terms. Also, it is more practical to enclose the full terms of a sale in a box. • If a court finds that the buyer learned of the shrink-wrap terms after the parties entered into a contract, the court might conclude that those terms were proposals for additional terms, which were not part of the contract unless the buyer expressly agreed to them.
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3. Browse-Wrap Terms
Browse-wrap terms, which can also occur in an online transaction, do not require a user to assent to the terms before going ahead with the deal. Offerors of these terms generally assert that they are binding without the user’s active consent. Critics argue that a user should at least be required to navigate past the terms before they should be considered binding.
The text discusses how e-signatures are created and verified, and their legal effect.
A. E-Signature Technologies
The text discusses three common methods for creating e-signatures.
B. State Laws Governing E-Signatures
Most states have laws governing e-signatures, although the laws are not uniform. The Uniform Electronic Transactions Act (UETA), issued in 1999 and adopted by most states, was an attempt by the National Conference of Commissioners on Uniform State Laws (NCCUSL) to create more uniformity.
C. Federal Law on E-Signatures and E-Documents
In 2000, Congress enacted the Electronic Signatures in Global and National Commerce Act (E-SIGN Act) to provide that no contract, record, or signature may be “denied legal effect” solely because it is in an electronic form. Some documents are excluded, most notably documents governed by Articles 3, 4, and 9 of the UCC.
III. Partnering Agreements
Through a partnering agreement, a seller and a buyer agree in advance on the terms to apply in all transactions subsequently conducted electronically. These terms may include access and identification codes. A partnering agreement, like any contract, can prevent later disputes. IV. The Uniform Electronic Transactions Act The UETA, which is a draft of legislation suggested to the states by the National Conference of Commissioners of Uniform State Laws (NCCUSL) and the American Law Institute (ALI), removes barriers to e-commerce by giving the same legal effect to electronic records and signatures as to paper documents and signatures.
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A. The Scope and Applicability of the UETA
The UETA applies only to e-records and e-signatures relating to a transaction (an interaction between two or more people relating to business, commercial or governmental activities).
The UETA does not apply to laws governing wills or testamentary trusts, the UCC (except Articles 2 and 2A), the UCITA, and other laws excluded by the states. B. The Federal E-SIGN Act and the UETA
If a state enacts the UETA without modification, the E-SIGN Act does not preempt it. The E-SIGN Act does preempt modified versions of the UETA to the extent that they are inconsistent with the E-SIGN Act. Under the E-SIGN Act, states may enact alternative procedures or requirements for the use or acceptance of e-records or e-signatures if (1) those procedures or requirements are consistent with the E-SIGN Act, (2) the state’s procedures do not give greater legal effect to any specific type of technology, and (3) if the state adopts the alternative after the enactment of the E-SIGN Act, the state law must refer to the E-SIGN Act.
C. Highlights of the UETA
State versions may vary.
1. The Parties Must Agree to Conduct Transaction Electronically This agreement may be implied by the circumstances and the parties’ conduct (for example, giving out a business card with an e-mail address on it).
Consent may also be withdrawn.
2. Parties Can “Opt Out”
Parties can waive or vary any or all of the UETA, but the UETA applies in the absence of an agreement to the contrary. 3. Attribution The effect of an e-record is determined from its context and circumstances. A person’s name is not necessary to give effect to an e-record, but if, for example, a person types her or his name at the bottom of an e-mail purchase order, that typing qualifies as a “signature” and is attributed to the person. Any relevant evidence can prove that an e-record or e-signature is, or is not, the act of the person. If issues arise relating to agency, authority, forgery, or contract formation, state laws other than the UETA apply.
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A document can be notarized by a notary’s e-signature.
5. The Effect of Errors
If the parties agree to a security procedure and one party does not detect an error because it did not follow the procedure, the conforming party can avoid the effect of the error [UETA 10]. If the parties do not agree on a security procedure, other state laws determine the effect of the mistake. To avoid the effect of an error, a party must (1) promptly notify the other of the error and of his or her intent not to be bound by it and (2) take reasonable steps to return any benefit or consideration received. If restitution cannot be made, the transaction may be unavoidable.
An e-record is sent when it is properly directed from the sender’s place of business to the intended recipient in a form readable by the recipient’s computer at the recipient’s place of business that has the closest relation to the transaction (or either party’s residence, if there is no place of business).
Once an e-record leaves the sender’s control or comes under the recipient’s control, it is sent. An e-record is received when it enters the recipient’s processing system in a readable form—even if no person is aware of its receipt.