ACC473 Ch12
UETA does not create new rules, but rather enforces _________ rules on electronic contracts. -Recognizes validity of e-signatures and electronic documents
"real world"
As defined by the Uniform Electronic Transactions Act, "an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record."
E-signature
A letter revoking offer mailed on June 1 and received by offeree on June 3 is effective when?
Effective June 3
Among other things, the UETA declares that a signature may not be denied legal effect or enforceability solely because it is in _________ form.
Electronic
The UETA has been adopted, at least in part, by forty-eight states, resulting in more uniformity among state laws governing __________ transactions.
Electronic
Unilateral Contract (promise for performance) -Acceptance is _________
Evident (notification is therefore not necessary unless the law requires it or the offeror asks for it) -Performance is acceptance
Advertisements, catalogues, price lists, and circulars are treated as:
Invitations to negotiate, and NOT as contract offers
Although most offers are revocable, some can be made _________—that is, they cannot be revoked.
Irrevocable
An Option contract is a form of a __________ offer
Irrevocable
Exception to Revocation of the Offer by the Offeror
Irrevocable offers such as an Option Contract: (Promise to hold an offer open for a specific period of time in return of consideration; Generally used in conjunction with sales or leases of real estate)
A request or invitation to negotiate; Expresses a willingness to discuss the possibility of entering into a contract. Examples: Statements such as "Will you sell your farm? or "I wouldn't sell my car for less than $8,000"
Preliminary negotiations
E-SIGN is pre-empted by state passing of
UETA
If existing state law requires a document to be notarized, the __________ provides that this requirement is satisfied by the electronic signature of a notary public or other person authorized to verify signatures.
UETA
State law is controlling if it enacts
UETA
The __________ does not create new rules for electronic contracts. Rather, it establishes that records, signatures, and contracts may not be denied enforceability solely due to their electronic form.
UETA
The seller's website should include a ___________ to a page containing the full contract so that potential buyers are made aware of the terms to which they are assenting. The contract generally must be displayed online in a readable format, such as a twelve-point typeface. All provisions should be reasonably clear.
hypertext link
A statute or court decision that makes an offer ________ automatically terminates the offer
illegal
The most familiar type of auction today takes place online through websites like eBay and eBid. "Offers" to sell an item on these sites generally are treated as ___________. Unlike live auctions, online auctions are automated. Buyers can enter incremental bids on an item (without approving each price increase) up to a specified amount or without a limit.
invitations to negotiate.
Death automatically terminates offer unless ________ offer (option contract)
irrevocable
Clearly, disputes can arise about agreement in e-contracts, as well as about the terms and conditions of those contracts. One way that online sellers and buyers can prevent such disputes agreement is to form ____________
partnering agreements
In contrast, a revocable offer is _________ to both parties and cannot pass to the heirs, guardian, or estate of either party. This rule applies whether or not the other party had notice of the death or incompetence.
personal
The problem is that many states have enacted nonuniform (modified) versions of the UETA, largely for the purpose of excluding other areas of state law from the UETA's terms. The E-SIGN Act specifies that those exclusions will be _________ to the extent that they are inconsistent with the E-SIGN Act's provisions.
preempted
If the parties agree on certain major terms but leave other terms open for further negotiation, a _________ is not binding. The parties are bound only in the sense that they have committed themselves to negotiate the undecided terms in good faith in an effort to reach a final agreement.
preliminary agreement
Sellers doing business via the Internet can protect themselves against contract disputes and legal liability by creating offers that clearly spell out the _________ that will govern their transactions if the offers are accepted. All important _________ should be conspicuous and easy to view.
terms
The ________ may be contained on a website through which the buyer is obtaining goods or services. They may also appear on a screen when software is downloaded from the Internet.
terms
Revocation is effective when:
the Offeree or Offeree's agent receives it (Offeree's agent is a person acting on behalf of the offeree)
Mailbox Rule
"deposited acceptance rule" -Acceptance becomes effective on dispatch, providing that Offeree accepts via the mode expressly or impliedly authorized by the offeror -If U.S. Mail, acceptance upon dispatch (applies to private delivery services if designated in offer)
Partnering Agreements
-Sellers and buyers who frequently do business together agree on the terms for subsequent online agreements
"E-Mailbox" Rules (when parties have agreed to electronic commerce)
-Sent when leaves control of sender and is properly directed to recipient -Received when enters recipient's processing system (even if unaware) -Allows an e-mail acceptance to be effective when sent
Unequivocal acceptance must occur:
-The "Mirror Image" Rule -Change in terms is a "counteroffer"
Acceptance is the:
1. Voluntary act (expressed or implied; AKA words or conduct) 2. By the Offeree that, 3. Shows assent (agreement), 4. To the terms of an offer
UETA does not apply to:
1. Wills and testamentary trusts 2. Transactions governed by UCC other than Articles 2 and 2A 3. Other areas of law specifically excluded by adopting states
(1) In contract law, the offeree's notification to the offeror that the offeree agrees to be bound by the terms of the offeror's proposal. (2) In negotiable instruments law, the drawee's signed agreement to pay a draft when presented.
Acceptance
An offer is automatically terminated if the specific subject matter of the offer (such as a smartphone or a house) is ________ before the offer is accepted.
Destroyed; Notice of the destruction is not required for the offer to terminate
Electronic Signatures in Global and National Commerce Act (E-SIGN)
Federal statute recognizing the validity of electronic contracts, records, and signatures
An offer made to the general public can be revoked how?
In the same manner the offer was originally communicated (For instance, an offer made on specific websites or in particular newspapers can be revoked on the same websites or in the same newspapers.)
The Mailbox Rule does not apply to:
Instantaneous communications such as face-to-face, telephone, e-commerce, fax, and usually by email
In contract law, the withdrawal of an offer by an offeror. Unless an offer is irrevocable, it can be revoked at any time prior to acceptance without liability.
Revocation
The offeror's act of revoking, or withdrawing, an offer is known as
Revocation
An offer can be terminated by action of the parties in any of three ways:
Revocation, Rejection, or by Counteroffer
An electronic record is considered sent when it is properly directed to the intended recipient in a form readable by the recipient's computer system. Once the electronic record leaves the control of the sender or comes under the control of the recipient, the ________ deems it to have been sent.
UETA
E-SIGN explicitly refers to:
UETA
When the parties have clearly manifested their intent to form a contract, courts sometimes are willing to supply a missing term in a contract, especially a sales contract. But a court will not rewrite a contract if the parties' expression of intent is too _________ to be given any precise meaning
Vague or uncertain
For a contract to be considered _________ and ________, four basic requirements--agreement, consideration, contractual capacity, and legality--must be met
Valid and enforceable
Parties must _________ to use electronic signatures
agree
For an e-signature to be enforceable, the contracting parties must have:
agreed to use electronic signatures
The E-SIGN Act explicitly allows the states to enact __________ requirements for the use of electronic records or electronic signatures. Generally, however, the requirements must be consistent with the provisions of the E-SIGN Act, and the state must not give greater legal status or effect to one specific type of technology. Additionally, state laws that include alternative requirements, if enacted after the adoption of the E-SIGN Act, must specifically refer to the E-SIGN Act.
alternative
If the offeror does not expressly authorize a certain mode of acceptance, then acceptance can be made by ______________. Courts look at the prevailing business usages and the surrounding circumstances to determine whether the mode of acceptance used was reasonable.
any reasonable means.
If the offer states that it will be left open until a particular date, then the offer will terminate when?
at midnight on that day
Purpose of UETA is to remove _______ to forming electronic commerce
barriers
To avoid the effect of errors, a party must promptly notify the other party of the error and of her or his intent not to be bound by the error. In addition, the party must take reasonable steps to return any benefit received. Parties cannot avoid a transaction if they have __________.
benefitted
When a government entity or private firm needs to have construction work done, contractors are invited to submit ________. The invitation to submit this is not an offer. The _______ that contractors submit ARE offers, however, and the government entity or private firm can bind the contractor by accepting the ______.
bids
Sometimes, however, the courts have refused to enforce certain terms included in shrink-wrap agreements because the buyer did not expressly _______ to them. An important factor is when the parties formed their contract. If a buyer orders a product over the telephone, for instance, and is not informed of an arbitration clause or a forum-selection clause at that time, the buyer clearly has not expressly agreed to these terms. If the buyer discovers the clauses after the parties have entered into a contract, a court may conclude that those terms were proposals for additional terms and were not part of the contract.
consent
Disputes concerning e-contracts center around:
contract terms and whether the parties have voluntarily assented to terms
Instant messaging and e-mailing are among the most common forms of informal communication. Not surprisingly, parties considering an agreement often exchange offers and counteroffers via e-mail (and, to a lesser extent, instant messaging). The parties may believe that these informal electronic exchanges are for negotiation purposes only. But such communications can lead to the formation of valid ________.
contracts
"I accept if you send a written contract" -Acceptance is expressly condition on request for written contract. Not an acceptance, but a _________
counteroffer
Substitute Method of Acceptance -Not effective on ________
dispatch
When an offeror specifies how acceptance should be made (for instance, by overnight delivery), ___________ is said to exist. The contract is not formed unless the offeree uses that specified mode of acceptance. Moreover, both offeror and offeree are bound in contract the moment this means of acceptance is employed.
express authorization
When an offeror specifies how acceptance should be made (for instance, by overnight delivery), ____________ is said to exist. The contract is not formed unless the offeree uses that specified mode of acceptance. Moreover, both offeror and offeree are bound in contract the moment this means of acceptance is employed.
express authorization
Online Offers: -Displaying the Offer: Seller's Web site should include:
hyperlink to page with full contract
Serious _________ is not determined by the subjective intentions, beliefs, and assumptions of the offeror
intent
Traditionally, agreements to agree—that is, agreements to agree to the material terms of a contract at some future date—were not considered to be binding contracts. The modern view, however, is that agreements to agree may be enforceable agreements (contracts) if it is clear that the parties intended to be bound by the agreements. In other words, under the modern view the emphasis is on the parties' _______ rather than on _________.
intent; form
An offeree's power of acceptance is also terminated when the offeror or offeree dies or is legally incapacitated-unless the offer is
irrevocable
Acceptance by a substitute method is not effective on dispatch, however. No contract will be formed until the acceptance:
is received by the offeror. (Bennion's offer specifies acceptance via FedEx overnight delivery, but the offeree accepts instead by overnight delivery from UPS. The substitute method of acceptance will still be effective, but not until the offeror (Bennion) receives it from UPS.)
Courts have on occasion construed advertising to be an offer where:
it contains definite terms that invite acceptance (i.e., Ad offering reward for return of a lost pet. Unilateral Contract)
An electronic record is considered received when:
it enters the recipient's processing system in a readable form—even if no individual is aware of its receipt.
Like a revocation, a rejection of an offer is effective only when:
it is actually received by the offeror or the offeror's agent
The general rule is that acceptance in a bilateral contract is timely if:
it is made before the offer is terminated (Problems may arise, though, when the parties involved are not dealing face to face. In such situations, the offeree should use an authorized mode of communication.)
Hague Convention on the Choice of Court Agreements provides certainty on
jurisdiction and enforcement
E-SIGN provides that no contract, record, or signature may be denied _________ solely because it is in electronic form
legal effect
Sale of software usually involves a:
license or usage right and not a passage of title
State law must conform to ________ E-SIGN procedures
minimum
The E-SIGN Act explicitly provides that if a state has enacted the uniform version of the UETA, that law is not preempted by the E-SIGN Act. In other words, if the state has enacted the UETA without _________, state law will govern.
modification
Bilateral Contract (promise for a promise) -Communications of acceptance is __________ because of mutual exchange of promises (acceptance is in the form of a promise). Not necessary if offer dispenses with communication requirement
necessary
Offers made in anger, jest, or undue excitement are usually:
not offers (they do not meet the serious-and-objective-intent test) A reasonable person would realize that such offers were not made seriously. Because these offers are not effective, an offeree's acceptance does not create an agreement
The UETA does not contain any express ________ about what constitutes fraud or whether an agent is authorized to enter into a contract. Under the UETA, other state laws control if any issues relating to agency, authority, forgery, or contract formation arise
provisions
Substitute Method of Acceptance -Effective when:
received by the offer
Electronic signature must be in a form that can be ________ to be valid
retained or reproduced
Generally, the contract creates enforceable _______ and _______ between the parties
rights and duties
Option contracts are frequently used in conjunction with the:
sale or lease of real estate
Acceptance takes effect, thus completing formation of the contract, at the time the offeree _____________ the communication via the mode expressly or impliedly authorized by the offeror.
sends or delivers (this is the so-called mailbox rule)
In some instances, the offeree does have a duty to _________, and his or her silence or inaction will operate as an acceptance. Silence can constitute an acceptance when the offeree has had prior dealings with the offeror
speak
An important point to keep in mind is that the offeror (the seller) controls the offer and thus the resulting contract. The seller should therefore anticipate the terms he or she wants to include in a contract and provide for them in the offer. In some instances, a ___________ may suffice.
standardized contract form
If the UETA is enacted without modifications,
state law governs
If the offeree rejects the offer, by words or by conduct, the offer is ________. Any subsequent attempt by the offeree to accept will be construed as a new offer, giving the original offeror (now the offeree) the power of acceptance
terminated
Lee offers to lend Kim $10,000 at an annual interest rate of 15 percent. Before Kim can accept the offer, a law is enacted that prohibits interest rates higher than 8 percent. Lee's offer is automatically _________. (If the statute is enacted after Kim accepts the offer, a valid contract is formed, but the contract may still be unenforceable.)
terminated
The power of acceptance does not continue forever, though. It can be _________ either by action of the parties or by operation of law
terminated
A court can supply missing ________ if the parties clearly intended to form a contract
terms
If the offer states that it will be open for a number of days, this time period normally begins to run when:
the offeree receives the offer (not when it is formed or sent)
Sometimes, the offeror authorizes a particular method of acceptance, but the offeree accepts by a different means. In that situation, the acceptance may still be effective if:
the substituted method serves the same purpose as the authorized means.
Serious intent is determined by:
what a reasonable person in the offeree's position would conclude that the offeror's words and actions meant
Dispute Settlement Provisions
-Choice of Law -Choice of Forum (Forum-Selection Clause) -Arbitration provision
A voluntary act by the offeree that shows assent (agreement) to the terms of an offer. The offeree's act may consist of words or conduct. The ________ must be unequivocal and must be communicated to the offeror.
Acceptance
Whether the offeror must be notified of the acceptance depends on the ________ of the contract
nature (unilateral or bilateral)
What are the elements of a contract?
-Agreement -Consideration -Contractual capacity -Legality -Form
Agreements to Agree/Preliminary Agreements
-Agreement to agree to the material terms of a contract at a future date -Not a binding contract
Mode and Timeliness of Acceptance:
-Authorized method of acceptance? -Offer specifies (expressly or impliedly) how acceptance should be made -Effective when dispatched (mailed, shipped) if authorized means of acceptance -Compare to revocation of an offer (by offeror) which is effective on receipt by the offeree
Termination by Operation of Law: Destruction of the Subject Matter
-Before acceptance of offer, terminates offer -Notice of destruction is not required
An offer can be withdrawn anytime before the offeree accepts the offer (Revocation) by:
-By express repudiation(rejection) of the offer ("I withdrawal my offer of August 30") -By performance of an act inconsistent with the existence of the offer (i.e., Selling underlying property to 3rd party in presence of offeree)
Shrink-Wrap Agreements
-Contract terms are inside the box -Party opening box agrees to terms by keeping merchandise regardless if reads the terms -Generally, agreement is between the manufacturer of the hardware or software and the ultimate buyer or user (the terms generally concern warranties, remedies, and other issues associated with the use of the product)
E-SIGN does not apply to all types of legal documents. Excluded are:
-Court papers -Divorce decrees -Evictions -Foreclosures -Health-insurance terminations -Wills -Prenuptial agreements
Sometimes Offeree has a duty to speak:
-Implied-in-fact contract -Prior business dealings
Browse-Wrap Terms
-Internet user does not ascent to terms before downloading or using software -Offerors of browse-wrap software assert that the terms are binding -Other argument is that a browse-wrap agreement is not valid since it does not satisfy basic elements of a contract (i.e., offer and acceptance)
Termination by Operation of Law: Supervening Illegality of the Proposed Contract (change in law)
-Legislative or court decision automatically terminates offer or renders contract (if offer accepted) unenforceable
Termination by Operation of Law: Lapse of Time
-Offer terminates by law when the period of time specified in the offer has passed -If no time period for acceptance is specified, the offer terminates at the end of a reasonable period of time
Rejection of the offer by the Offeree:
-Rejection by the Offeree (expressed or implied) terminates the offer. -Effective only when it is received by the Offeror or Offeror's agent.
If the UETA is enacted with modifications, the E-SIGN Act governs if:
-The modifications are inconsistent with the E-SIGN Act
If the UETA is enacted with modifications, State law governs if:
-The state's procedures or requirements are consistent with the E-SIGN Act -The state does not give priority to one type of technology -The state law was enacted after the E-SIGN Act and refers to it
Provisions to include in E-Contracts (at a minimum, an online offer should include these provisions)
1. Acceptance of terms (click box "I accept") 2. Method of Payment 3. Seller's Refund and Return Policies 4. Disclaimers of Liability (ex: use of legal forms purchased; seller does not accept responsibility for.... etc.) 5. Limitation on remedies (a provision specifying the remedies available to the buyer if the goods are found to be defective or if the contract is otherwise breached; limitation of remedies should be spelled out) 6. Privacy policy (how will seller use buyer's information?) 7. Dispute Settlement Provisions
An offer may be terminated prior to acceptance by either:
1. Action of the Parties 2. Operation of Law
Offeree's must have knowledge of the offer:
1. Communicate directly by the Offeror, or 2. Communicate by the Offeror to an Agent of the Offeree -A party cannot agree to an offer if the party has no knowledge of the offer
E-Signature includes:
1. Encrypted digital signatures (names intended as signatures) at the end of an e-mail message 2. "Clicks" on a web page if the clicks include identification of the person
An offer must have terms that are reasonably definite: (either expressed in the contract or capable of being reasonably inferred from it:)
1. Identification of the parties 2. Identification of the Object or subject matter of the contract (also quantity, when appropriate) 3. Consideration to be paid 4. The Time of payment, Delivery, or Performance
Exceptions to Mailbox Rule:
1. If acceptance is not properly dispatched by the Offeree 2. If Offeror specifies that acceptance will not be effective until it is received 3. If acceptance is sent after rejection, whichever is received first is given effect
The power of the offeree to transform the offer into a binding legal obligation can be terminated by operation of law through the occurrence of any of the following events:
1. Lapse of time 2. Destruction of the specific subject matter of the offer 3. Death or incompetence of the offeror or the offeree 4. Supervening illegality of the proposed contract
Requirements of the Offer
1. Offeror must have serious intention to become bound by the offer 2. Definiteness of terms; terms of the offer must be reasonably certain (so that the parties and the court can ascertain the terms of the contract) 3. The offer must be communicated to the offeree
A meeting of two or more minds in regard to the terms of a contract; usually broken down into two events—an offer by one party to form a contract, and an acceptance of the offer by the person to whom the offer is made.
Agreement
E-Signature
An electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record
What is the Mirror Image Rule?
At common law, any change in terms automatically terminates the offer and substitutes the counteroffer
In a __________ contract, in contrast, communication of acceptance is necessary, because acceptance is in the form of a promise. The __________ contract is formed when the promise is made rather than when the act is performed.
Bilateral
Terms and conditions of use that are presented to an Internet user at the time a product, such as software, is downloaded but that need not be agreed to before the product is installed or used.
Browse-wrap terms
Click-On Agreement occur when:
Buyer "checks out" or clicks on "I Accept" or "I Agree" button on seller's website or when software is installed. Contract can be formed via website or software (no requirement to read all the terms; if click the "I agree" or "I accept" button, the law assumes the party has read all the contract terms)
Methods by which an offer can be terminated; By ______________ -Revocation -Rejection -Counteroffer
By Action of the Parties
Methods by which an offer can be terminated; By ____________ -Lapse of time -Destruction of the subject matter -Death or incompetence of the offeror of offeree -Supervening illegality
By Operation of Law
An agreement that arises when a buyer, engaging in a transaction on a computer, indicates his or her assent to be bound by the terms of an offer by clicking on a button that says, for example, "I agree"; sometimes referred to as a click-on license or a click-wrap agreement.
Click-on agreement
Objective Theory of Contracts
Contract is judged by what a "reasonable person" in the Offeree's position would conclude about the offer
Disputes concerning e-contracts, however, tend to center on:
Contract terms and whether the parties voluntarily agreed to those terms.
An offeree's response to an offer in which the offeree rejects the original offer and at the same time makes a new offer.
Counteroffer
An acceptance may be unequivocal even though the offeree expresses __________ with the contract; For instance, "I accept the offer, but can you give me a better price?" or "I accept, but please send a written contract" is an effective acceptance.
Dissatisfaction
Congress passed the ___________ in 2000, a year after the UETA was presented to the states for adoption. Thus, a significant issue was to what extent the federal ___________ preempted the UETA as adopted by the states.
E-SIGN Act
E-Signature Technologies: Exclusions
E-SIGN does not apply to all documents including court papers, divorce decrees, evictions, foreclosures, health insurance terminations, prenuptial agreements, and wills
Many online contracts contain a ___________ indicating the forum, or location (such as a court or jurisdiction), in which contract disputes will be resolved. Significant jurisdictional issues may arise when parties are at a great distance, as they often are when they form contracts via the Internet. A ___________ will help to avert future jurisdictional problems and also help to ensure that the seller will not be required to appear in court in a distant state.
Forum-selection clause
Another treaty relevant to e-contracts is the __________. Although it does not specifically mention e-commerce, this convention provides more certainty regarding jurisdiction and recognition of judgments by other nations' courts, thereby facilitating both offline and online transactions.
Hague Convention on the Choice of Court Agreements
A means of communicating acceptance can be expressly authorized by the offeror or impliedly authorized by the facts and circumstances of the situation. An acceptance sent by means not expressly or impliedly authorized normally is not effective until:
It is received by the offeror
Under the mailbox rule, if the authorized mode of communication is the _______, then an acceptance becomes valid when it is dispatched (placed in control of the U.S. Postal Service), not when it is received by the offeror. (Note, however, that if the offer stipulates when acceptance will be effective, then the offer will not be effective until the time specified.)
A rule providing that an acceptance of an offer becomes effective on dispatch.
Mailbox rule
A common law rule that requires, for a valid contractual agreement, that the terms of the offeree's acceptance adhere exactly to the terms of the offeror's offer. Any change in, or addition to, the terms of the original offer automatically terminates that offer and substitutes the counteroffer.
Mirror image rule
Does inquiring about the firmness of an offer constitute a rejection?
No (example 12.7: Raymond offers to buy Francie's digital pen for $100. She responds, "Is that your best offer?" A reasonable person would conclude that Francie has not rejected the offer but has merely made an inquiry. Francie could still accept and bind Raymond to the $100 price.)
Does an agreement need to be in writing?
No (however, both parties must manifest their assent, or voluntary consent, to the same bargain)
Are Live and online auctions offers?
No, but there is an invitation to submit offers through an auctioneer (live) or to negotiate (online) -The bidder is the offeror, and the auctioneer is the offeree -The offer is accepted when the auctioneer strikes the hammer
Are Preliminary negotiations, and agreements to agree offers?
No; -invitation to submit a bid -IF agreement on essential terms and no disputed issues remain to be resolved, Court will review to determine if contract exists
Is a statement of future intention an offer? ex: "I plan to sell my vacation home for $100,000"
No; "I plan to sell my vacation home for $100,000" is not an offer
Are expressions of opinion offers?
No; it does not indicate an intention to enter into a binding agreement
Because words often fail to convey the precise meaning intended, the law of contracts generally adheres to the:
Objective theory of contracts
A promise or commitment to perform or refrain from performing some specified act in the future
Offer
Agreement =
Offer and Acceptance
Party to whom the offer is made
Offeree
Party making an offer
Offeror
A ________ contract is created when an offeror promises to hold an offer open for a specified period of time in return for a payment (consideration) given by the offeree. This contract takes away the offeror's power to revoke the offer for the period of time specified in the contract
Option
A contract under which the offeror cannot revoke his or her offer for a stipulated time period and the offeree can accept or reject the offer at any time during this period. The offeree must give consideration (payment) for the option to be enforceable.
Option contract
Agreements to Agree/Preliminary Agreements may be enforceable if:
Parties have agreed on: 1) all essential terms 2) no disputed issues 3) intended to be bound (This is the Modern view)
A _________ agreement can establish special access and identification codes to reduce the risk of fraud or other unauthorized activity -Reduces likelihood that a contract dispute will arise because the parties have agreed in advance to the term and conditions for each sale; Furthermore, if a dispute does arise, a court or arbitration forum will be able to refer to the partnering agreement when determining the parties' intent.
Partnering
An agreement between a seller and a buyer who frequently do business with each other on the terms and conditions that will apply to all subsequently formed electronic contracts.
Partnering agreement
In a ___________, a seller and a buyer who frequently do business with each other agree in advance on the terms and conditions that will apply to all transactions subsequently conducted electronically. The ___________ can also establish special access and identification codes to be used by the parties when transacting business electronically.
Partnering agreement
According to the Uniform Electronic Transactions Act, information that is either inscribed on a tangible medium or stored in an electronic or other medium, and that is retrievable.
Record
A counteroffer by the Offeree is a:
Rejection of the original offer and making of a new offer
Usually, the offeror's choice of a particular means in making the offer implies that the offeree can use the _______ or _________ means for acceptance.
Same or a faster means (thus, if the offer is made via Priority U.S. mail, it would be reasonable to accept the offer via Priority mail or by a faster method, such as overnight delivery)
An agreement whose terms are expressed in a document located inside a box in which goods (usually software) are packaged; sometimes called a shrink-wrap license.
Shrink-wrap agreement (Usually, the party who opens the box is told that she or he agrees to the terms by keeping whatever is in the box. Similarly, when a purchaser opens a software package, he or she agrees to abide by the terms of the limited license agreement.)
An offer can require _______ terms to make the contract definite
Specific Example: Marcus Business Machines contacts Best Products and offers to sell "from 1 to 10 laptop computers for $500 each; state the number desired in the acceptance." Best agrees to buy 2 computers. Thus, quantity is specified, and the contract is enforceable
The UETA does not apply to all writings and signatures. It covers only electronic records and electronic signatures relating to a ___________. A ____________ is defined as an interaction between two or more people relating to business, commercial, or governmental activities. The act specifically does not apply to wills or testamentary trusts or to transactions governed by the UCC (other than those covered by Articles 2 and 2A). In addition, the provisions of the UETA allow the states to exclude its application to other areas of law.
Transaction
Under the __________, if an electronic record or signature is the act of a particular person, the record or signature may be attributed to that person. If a person types her or his name at the bottom of an e-mail purchase order, for instance, that name qualifies as a "signature." The signature is therefore attributed to the person whose name appears on the purchase order.
UETA
The primary purpose of the _______ is to remove barriers to e-commerce by giving the same legal effect to electronic records and signatures as is given to paper documents and signatures.
UETA (Uniform Electronic Transactions Act)
The Restatement (Second) of Contracts, which is a compilation of common law contract principles, states that parties may agree to a contract "by written or spoken words or by other acts or by failure to act." The __________, which governs sales contracts, has a similar provision. Section 2-204 of the __________ states that any contract for the sale of goods "may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract." The courts have used these provisions in determining what constitutes an online acceptance.
Uniform Commercial Code (UCC)
Under the _________, e-mail is considered sent when it either leaves the control of the sender or is received by the recipient. This rule takes the place of the mailbox rule when the parties have agreed to conduct transactions electronically and allows an e-mail acceptance to become effective when sent.
Uniform Electronic Transactions Act
under the ____________, a contract "may not be denied legal effect solely because an electronic record was used in its formation." Most states have adopted this act, at least in part.
Uniform Electronic Transactions Act (UETA)
Uniform Electronic Transaction Act (UETA)
Uniform state law recognizing the validity of electronic contracts, records, and signatures
In a ________ contract, the full performance of some act is called for. Acceptance is usually evident, and notification is therefore unnecessary (unless the law requires it or the offeror asks for it)
Unilateral
Generally, only the person to whom the offer is made or that person's agent can ________ the offer and create a binding contract
accept
"I accept the offer, but can you give me a better price?" -Better price is not a condition of
acceptance
"I accept; please send a written contract" -Written contract is not a condition of
acceptance
Acceptance of Services by Silence -Ordinarily, silence is not __________. Even if the offeror states, "By your silence and inaction, you will be deemed to have accepted this offer." An offeree should not be obligated to act affirmatively to reject an offer when no consideration (nothing of value) has passed to the offeree to impose such a duty
acceptance
In some cases, the courts have enforced the terms of shrink-wrap agreements in the same way as the terms of other contracts. These courts have reasoned that by including the terms with the product, the seller proposed a contract. The buyer could accept this contract by using the product after having an opportunity to read the terms. Thus, a buyer's failure to object to terms contained within a shrink-wrapped software package may constitute an _________ of the terms by conduct.
acceptance
The communication of an effective offer to an offeree gives the offeree the power to transform the offer into a binding legal obligation (a contract) by ________
acceptance
E-signature
an electronic sound, symbol or process... associated with a record and... adopted by a person with intent to sign the record
Parties must show mutual _______ to terms of contract
assent (agreement)
The parties themselves may agree to use a security procedure. If they do, and if one party does not follow the procedure and thus fails to detect an error, the party that followed procedure can legally _________ the effect of the error. When the parties have not agreed to use a security procedure, then other state laws (including contract law governing mistakes) will determine the effect of the error.
avoid
The ________ contract is formed when the promise is made rather than when the act is performed.
bilateral
Like the terms of a click-on agreement, ___________ can appear in a transaction conducted over the Internet. Unlike a click-on agreement, however, browse-wrap terms do not require the buyer or user to assent to the terms before, say, downloading or using certain software.
browse-wrap terms
Some online contracts may also include a ___________, specifying that any contract dispute will be settled according to the law of a particular jurisdiction, such as a state or country. Choice-of-law clauses are particularly common in international contracts, but they may also appear in e-contracts to specify which state's laws will govern in the United States.
choice-of-law clause
The third requirement for an effective offer is ___________. The offer must be _________ to the offeree. Ordinarily, one cannot agree to a bargain without knowing that it exists
communication/communicated
An acceptance cannot impose new conditions or change the terms of the original offer. If it does, the acceptance may be considered a counteroffer, which is a rejection of the original offer. For instance, the statement "I accept the offer but only if I can pay on ninety days' credit" is a _________ and not an unequivocal acceptance.
counteroffer
Burke offers to sell his home to Lang for $270,000. Lang responds, "Your price is too high. I'll offer to purchase your house for $250,000." Lang's response is a __________ because it rejects Burke's offer to sell at $270,000 and creates a new offer by Lang to purchase the home for $250,000.
counteroffer
Note that even when the additional terms are construed as a _________, the other party can accept the terms by words or by conduct.
counteroffer
An offer must have reasonably ________ terms so that a court can determine if a breach has occurred and give an appropriate remedy
definite
What constitutes a reasonable period of time?
depends on the subject matter of the contract, business and market conditions, and other relevant circumstances. ex: an offer to sell farm produce will terminate sooner than an offer to sell farm equipment. (farm produce is perishable and is subject to greater fluctuations in market value)
Online offers frequently include provisions relating to __________. For instance, an offer might include an arbitration clause specifying that any dispute arising under the contract will be arbitrated in a designated forum. The parties might also select the forum and the law that will govern any disputes.
dispute settlement
To exercise the power of acceptance effectively, the offeree must accept unequivocally. This is the mirror image rule previously discussed. An acceptance may be unequivocal even though the offeree expresses ___________ with the contract; I accept, BUT.... (still acceptance; words are important!)
dissatisfaction
A contract that is entered into in cyberspace and is evidenced only by electronic impulses (such as those that make up a computer's memory), rather than, for example, a typewritten form.
e-contracts
Numerous contracts are formed online. Electronic contracts, or __________, must meet the same basic requirements (agreement, consideration, contractual capacity, and legality) as paper contracts.
e-contracts
UETA only applies to:
e-records and e-signatures relating to a business, commercial or governmental transactions
United Nations Convention on the Use of Electronic Communications in International Contracts (2005) recognizes validity of
e-signatures
The UETA does not apply to a transaction unless each of the parties has previously agreed to conduct transactions by _________ means. The agreement may be explicit, or it may be implied by the conduct of the parties and the surrounding circumstances.
electronic
The Uniform Electronic Transactions Act (UETA) (1999) attempts to create uniformity. It provides that a signature may not be denied legal effect or enforceability solely because it is ________
electronic
It may sometimes be reasonable to infer that a person who gives out a business card with an e-mail address on it has consented to transact business __________
electronically
Sybil Maven offers to sell commercial property to Westside Investment for $2 million. In June, Westside pays Maven $5,000 in exchange for her agreement to hold the offer open for ten months (forming an option contract). If Maven dies in July, her offer is not terminated, because it is _________. Westside can purchase the property from Maven's estate at any time within the ten-month period.
irrevocable
Unless an offer is __________, the offeror usually can revoke the offer, as long as the revocation is communicated to the offeree before the offeree accepts.
irrevocable
Unauthorized means of acceptance -Normally not effective until:
it is received by the offeror
Once an effective offer has been made, the offeree's acceptance of that offer creates a:
legally binding contract (providing the other essential elements for a valid and enforceable contract are present)
The "sale" of software generally involves a _______, or a right to use the software, rather than the passage of title (ownership rights) from the seller to the buyer.
license (ex: When Lauren downloads an app on her smartphone, she has to select "I agree" several times to indicate that she agrees to the terms and conditions under which she will use the software. After she agrees to these terms (the licensing agreement), she can use the app.)
Online Contract Formation: -Contracts for sale and purchase of goods and services, and for the purpose of
licensing
Online contracts may be formed not only for the sale of goods and services but also for _________
licensing
When a series of e-mails signal intent to be bound, a contract may be formed, even though some language in the e-mails may be careless or accidental. What matters is whether a court determines that it is __________ for the receiving party to believe that there is an agreement.
reasonable
A means of communicating acceptance can be expressly authorized by the offeror or impliedly authorized by the facts and circumstances of the situation. An acceptance sent by means not expressly or impliedly authorized normally is not effective until it is ________ by the offeror.
received
Offeree can have a duty to ______
reject Example 12.12: Marabel's restaurant routinely receives shipments of produce from a certain supplier. That supplier notifies Marabel's that it is raising its prices because its crops were damaged by a late freeze. If the restaurant does not respond in any way, the silence may operate as an acceptance, and the supplier will be justified in continuing regular shipments.
Substitute Method of Acceptance -Effective if the substitute:
serves the same purpose
In bilateral contracts, acceptance must be
timely
A contract that is formed electronically in cyberspace (e-contract) must meet the same requirements (except as to form) as a
traditional contract (agreement, consideration, contractual capacity, and legality)
To exercise the power of acceptance effectively, the offeree must accept ___________
unequivocally (this is the mirror image rule previously discussed)
Once an agreement is reached, if the other elements of a contract are present, a _______ contract is formed
valid
UETA State Law governing E-Signatures -Varies by state as to recognition of _______ of e-signatures
validity
The UETA encourages, but does not require, the use of security procedures (such as encryption) to ________ changes to electronic documents and to correct errors.
verify
A person who has agreed to an electronic transaction can _______ his or her consent and refuse to conduct further business electronically. In addition, the parties can agree to opt out of all or some of the terms of the UETA. If they do not do so, then the UETA terms will govern their electronic transactions.
withdraw