chapter 11

Electronic Signatures

In many instances, a contract is unenforceable unless there is some writing, signed by the party against whom enforcement is sought, evidencing the contract.

Offer: The offer's terms must be reasonably ___________.

certain

Offer: The offeror must seriously _____to perform or refrain as offered.

intend

Supervening Illegality

A statute or court action that makes a previously valid offer illegal will automatically terminate the offer.

Courts are generally receptive to shrink-wrap terms

(1) if the offeror presents the terms before the offeree has accepted, (2) particularly where the exterior of the box or some other information provided to the offeree before she completes acceptance clearly indicates that the purchase/lease/license is subject to additional terms contained in the box or to be delivered with the goods, and (3) the offeror gives the offeree adequate time to review the terms, inspect the goods, and decide whether to keep them and be bound.

Coomunicating Acceptance: Exeptions: Unless the offer expressly states otherwise, an acceptance cannot take effect until the offeror receives it if

(1) the offeror conditioned his offer on receiving the offeree's acceptance; (2) the offeree improperly dispatched her acceptance; (3) the offeree communicated her acceptance using an unauthorized (but not expressly prohibited) means; or (4) the offeree dispatched her acceptance after dispatching a rejection or counteroffer (but the offeror received the acceptance first).

Definiteness: Generally, an offer must express the following terms, or they must be reasonably inferred from it:

(1) the offeror's and offeree's identities; (2) the object or subject matter of the offer (e.g., quantity of goods, work to be performed, specific identity of unique goods, etc.); (3) the consideration due; and (4) the time of payment, delivery, or performance.

An online offer to form a contract should clearly and conspicuously state:

(1) whether the offer is to sell, lease, or license, (2) how the offeree may accept, (3) how and how much the offeree may pay, including applicable taxes and shipping costs, (4) the offeror's return and refund policy (if applicable), (5) any liability disclaimers or limitations, (6) the offeree's remedies (and limits thereon), and (7) how the offeror will handle information it gathers, or the offeree provides, before and after acceptance.

Intent to offer: A variety of common statements generally are not offers, including

1. expressions of opinion; 2. statements of intent; 3. preliminary negotiations; 4. auctions and other invitations to bid, negotiate, or contract, including most forms of advertisement; and 5. agreements to agree to one or more material contract terms or conditions at some later date.

Examples of irrevocable offers

1. offers on which the offeree has justifiably relied to her detriment (a.k.a. promissory estoppel); 2. firm offers for the sale or purchase of goods made by a merchant and subject to the provisions of the Uniform Commercial Code ("UCC"); and 3. option contracts, under which the offeror, in exchange for valuable consideration from the offeree, cannot revoke her offer for a stipulated time period during which the offeree has the sole right of acceptance.

Acceptance by Silence

: Generally, silence (or inaction) cannot constitute acceptance - even when the offeror indicates that silence or inaction will be taken as acceptance.

E-Contract Formation

A contract formed electronically must meet the same requirements (except as to form) as a traditional contract.

Digitized Signature

A graphical image of a handwritten signature, created by using a digital pen and pad and specialized software.

Acceptance by Silence Exceptions

Acts Consistent with Acceptance Prior Dealings Unilateral Contract:

Partnering Agreement

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.

Click-On Agreement

An agreement that arises when a buyer/lessee/licensee completing a transaction online indicates her assent to be bound by the terms of an offer by clicking on a button or checking a box that says, e.g., "I accept" or "I agree." The terms of the agreement may appear on the screen or on a related Web page or site

Shrink-Wrap Agreement

An agreement whose terms are expressed inside the box containing the goods, such that an offeree cannot make herself fully aware of the terms of her purchase until after she has purchased/leased the goods and opened the box.

Digital Signature:

An asymmetric cryptosystem that creates a digital signature using two different "keys" - one of which is private to the signer, and the other of which may be used by a recipient, with the aid of a third party cybernotary, to verify the source of the digital signature.

E-Signature

An electronic sound, symbol, or process attached to or logically associated with an electronic record and executed or adopted by a person with the intent to sign the electronic record.

Signature Dynamic

An encrypted biometric token that allows a recipient to compare a signature created with a stylus and an electronic digitizer pad to a stored exemplar.

Destruction of Subject Matter

An offer terminates automatically if the subject matter of the contract (i.e., goods, property) is destroyed prior to acceptance

Lapse of Time

An offer terminates automatically when the time period specified in the offer expires.

"Mirror Image" Rule

An offeree's acceptance must match the offeror's offer exactly. If the offeree's acceptance non-trivially changes, adds to, or deletes any terms in the original offer, it is treated as a counteroffer, rather than an acceptance.

Death or Incompetence:

An offeree's power to accept is terminated when the offeree or the offeror dies or is deprived of legal capacity to enter into the contract, unless the offer is irrevocable, in which case only the offeree's death or incompetence will terminate the offer

Acceptance

An offeree's statement or act indicating her assent to the offer's terms.

Revocation

An offeror may withdraw his offer by communicating the revocation to the offeree at any time before the offeree accepts.

Offer

An offeror's promise or commitment to perform or refrain from performing some specified act presently or in the future.

Acceptance by Silence Exceptions: Unilateral Contract

Because a unilateral contract requires acceptance by some action on the part of the offeree, acceptance is usually evidenced by the action; and, therefore, notification is unnecessary - unless the offeror has specifically requested notification or has no means to determine whether the requested act has been performed.

Electronic Signatures in Global and National Commerce Act (E-SIGN)

Federal statute recognizing the validity of electronic contracts, records, and signatures

Acceptance by Silence Exceptions: Acts Consistent with Acceptance

If the offeree, despite having an opportunity to reject, takes the benefit of offered goods or services, he is implied to have accepted the goods or services and agreed to compensate the offeror according to the terms of the offer

Acceptance by Silence Exceptions: Prior Dealings

If the offeror and offeree have prior dealings, pursuant to certain standard terms and conditions, the offeree has the duty to reject or risk being bound by his silence.

Uniform Electronic Transactions Act (UETA)

Model state law - enacted by 47 states and D.C. - recognizing the validity of electronic contracts, records, signatures, and notarization.

Agreement

Mutual assent to a contract's essential terms, voluntarily manifested through offer and acceptance.

Browse-Wrap Agreement

Terms and conditions of use presented to an Internet user at the time she is using or downloading a product, to which she need not actively assent before she can use or download the product

Rejection

The offeree may reject the offer, in which case the offer terminates when the offeror receives notice of the rejection.

Counteroffer

The offeree's rejection of the original offer, coupled with the original offeree's new offer to the original offeror.

Pre-Dispute Planning

The offeror may also want to include provisions addressing governing law, choice of forum, and alternative dispute resolution.

The "Mailbox Rule"

Unlike a rejection or counteroffer, which takes effect when the offeror receives it, an acceptance generally takes effect when the offeree properly dispatches it to the offeror

The partnering agreement can also establish special _______and _________ ________to reduce the risk of fraud or other unauthorized activity.

access identification codes

UETA only applies if all parties to a transaction have explicitly or impliedly ________ to conduct the transaction ______ _________ _______.

agreed using electronic means

A court may supply or clarify a missing or indefinite term if the parties have

clearly manifested their intent to agree.

Offer: The offeror (or his agent) must ___________the offer to the offeree (or her agent).

communicate

Unless an offer is _________, the offeror may revoke an unaccepted offer _______ _____________.

irrevocable without liability

definiteness: An otherwise indefinite offer may invite an offeree to express her acceptance in such a way that the acceptance will make

the resulting agreement definite.

The acceptance must be _____________ and the offeree generally must _____________it to the offeror.

unequivocal communicate