law chapter 8
Agreement in E-Contracts
Federal Law on E-Signatures and E-Documents. E-SIGN (2000) gives e-signatures and e-documents legal force. For an e-signature to be enforceable, the contracting parties must have agreed to use electronic signatures. Partnering Agreements.
Termination of the Offer.
An offer may be terminated prior to acceptance by either: Action of the Parties or by Operation of Law.
Termination by Action of the Parties.
Revocation of the Offer by the Offeror: Offer can be withdrawn anytime before Offeree accepts the offer. Effective when the offeree or offeree's agent receives it.
record
information that is inscribed on a tangible medium or stored in electronic or other medium that is retrievable in visual form.
e-signature 153
"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." Thus, e-signatures include encrypted digital signatures, names (intended as signatures) at the ends of e-mail messages, and "clicks" on a Web page if the click includes the identification of the person. 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." ****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. Digitized Signature: graphical image of a handwritten signature.
record 154
"information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable [visual] form." 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 is retrievable.
shrink-wrap agreement 153
(or shrink-wrap license) is an agreement whose terms are expressed inside a box in which the goods are packaged. (The term shrink-wrap refers to the plastic that covers the box.) Usually, the party who opens the box is told that she or he agrees to the terms by keeping whatever is in the box. 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. ****Contract terms are inside the box. Party opening box agrees to terms by keeping merchandise. Enforceable vs. Unenforceable Terms.
mailbox rule 151
Acceptance takes effect, thus completing formation of the contract, at the time the offeree sends or delivers the communication via the mode expressly or impliedly authorized by the offeror. also called the deposited acceptance rule, which the majority of courts follow. Under this rule, if the authorized mode of communication is the mail, then an acceptance becomes valid when it is dispatched (placed in the control of the U.S. Postal Service)—not when it is received by the offeror. A rule providing that an acceptance of an offer becomes effective on dispatch (on being placed in an official mailbox), if mail is, expressly or impliedly, an authorized means of communication of acceptance to the offeror.
Highlights of the UETA.
Agreement: UETA only applies to transactions if both parties have agreed, but may be implied by conduct. Even if a party has previously agreed, he may withdraw consent (opt out). UETA does not create new rules, but rather enforces 'real world' rules on electronic contracts. Only applies to e-records and e-signatures relating to a "transaction" (interactions between two people relating to business, commercial, or governmental activities). UETA does not apply to wills or testamentary trusts. Does not apply unless each party has previously agreed to conduct electronic transactions. Can be implied by conduct and prior dealings. The Effect of Errors: UETA encourages use of security and encryption methods. Parties must notify each other promptly. Timing: once record leaves control of sender, UETA deems it "sent." The record is "received" when it enters recipients system in readable form - even if no individual is aware of its receipt.
Requirements of the Offer.
An offer is a promise to do or not do something in the future. The common law requires three elements for an effective offer: Offeror's serious intention. Reasonably certain terms. Communication to offeree. Offeror's serious, objective intention. A contract is judged by what a reasonable person in the offeree's position would conclude about the offer. CASE 8.1 Lucy v. Zehmer (1954). Do you think the Zehmers had a serious intention? Offeror's serious, objective intention. Expressions of Opinion: not offers. Statements of Future Intent: not offers. Preliminary Negotiations, or Invitations to Negotiate: not offers. Advertisements: not offers (invitations to negotiate).
Communication of Acceptance.
Bilateral Contract: communication of acceptance is necessary because there is a mutual exchange of promises. Unilateral Contract: acceptance is evident, notification not necessary. CASE 8.3 Powerhouse Custom Homes, Inc. v. 84 Lumber Co. (2011).
Termination by Operation of Law.
Destruction of the Subject Matter: before acceptance of offer, terminates the offer. Death or Incompetence of the Offeror or Offeree: automatically terminates unless irrevocable offer. Supervening Illegality of the Proposed Contract: by court or legislation.
Communication to Offeree.
Directly by the Offeror, or Use of Agents. CASE 8.2 Alexander v. Lafayette Crime Stoppers, Inc. (2010). Why did the appeals court grant summary judgment to the defendants?
Online Offers.
Displaying the Offer. Seller's website should include hyperlink to page with full contract. Provisions to Include. Provisions to Include: Acceptance of Terms: what constitutes an acceptance. Payment: how payment is made. Return Policy. Disclaimer: of liability for certain uses of the goods. Limitations on Remedies: if goods defective or contract is breached. Privacy Policy. Dispute resolution. Dispute -Settlement Provisions: usually arbitration or forum-selection clauses. Forum-selection clause.
The Federal E-SIGN and the UETA.
E-SIGN provides that if a state passes UETA, it is not preempted by the E-SIGN act (state law will govern). E-SIGN allows states to enact alternative e-record and e-signature statutes.
Substitute Method of Acceptance.
Effective if the substitute serves the same purpose (Fed-Ex vs. UPS). Not effective on dispatch. Effective when received by the Offeror.
e-contract 152
Electronic contracts, meet the same basic requirements (agreement, consideration, contractual capacity, and legality) as paper contracts. Disputes concerning e-contracts, however, tend to center on contract terms and whether the parties voluntarily agreed to those terms. A contract that is formed electronically.
Mode and Timeliness of Acceptance.
General Rule: in bilateral contracts, acceptance is timely if done before offer is terminated. The Mailbox Rule: acceptance is effective when offeree uses authorized means of acceptance. If U.S. Mail, acceptance is effective upon dispatch. If no means specified, acceptance can be by any reasonable means
Silence as Acceptance.
General Rule: offeree should not be legally obligated to affirmatively reject an offer. When Offeree Has Duty to Speak: He takes benefit of services with opportunity to reject. Prior dealings with Offeror.
Exceptions to the Mail Box Rule.
If Offeror specifies that acceptance will not be effective until it is received. If acceptance is sent after rejection, whichever is received first is given effect.
Attribution.
If electronic record or signature is act of a particular person, the record or signature is attributed to that person. However, state law governs issues of agency, authority, forgery, contract formation.
browse-wrap term 153
Like the terms of a click-on agreement, can occur in a transaction conducted over the Internet. Unlike a click-on agreement, however, browse-wrap terms do not require an Internet user to assent to the terms before, say, downloading or using certain software. In other words, a person can install the software without clicking "I agree" to the terms of a license. Browsewrap terms are often unenforceable because they do not satisfy the agreement requirement of contract formation. A term or condition of use that is presented to an Internet user at the time certain products, such as software, are being downloaded but that need not be agreed to (by clicking "I agree," for example) before the user is able to install or use the product. ****Like click-on agreements, browse-wrap terms can occur in transactions over internet. Unlike click-on agreements, browse-wrap terms do not require assent and are usually unenforceable.
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.
Requirements of the Offer.
Offeror's serious, objective intention. Auctions: when the auctioneer accepts a higher bid, she rejects all previous offers. Auctions with and Without Reserve. Agreements to Agree: can be enforceable if parties intended to be bound. Definiteness of Terms. An offer can require specific terms so that a court can determine whether a breach has occurred: Identification of the parties. Identification of the subject matter or object. Consideration to be paid. Time of payment, delivery, or performance.
The Uniform Electronic Transactions Act
Purpose is to remove barriers to forming electronic commerce. E-Signature is "electronic sound, symbol or process...associated with a record and... adopted by a person with intent to sign the record."
revocation 148
The offeror's act of withdrawing an offer Unless an offer is irrevocable, the offeror usually can revoke the offer (even if he or she has promised to keep the offer open), as long as the revocation is communicated to the offeree before the offeree accepts. Revocation may be accomplished by an express repudiation of the offer (for example, with a statement such as "I withdraw my previous offer of October 17") or by the performance of acts that are inconsistent with the existence of the offer and that are made known to the offeree. In contract law, the withdrawal of an offer by an offeror. Unless the offer is irrevocable, it can be revoked at any time prior to acceptance without liability.
Rejection of the Offer by Offeree.
When rejected, by words or conduct, by the offeree. Counteroffer by the offeree is a termination of the original offer. "Mirror-Image rule" applies.
Authorized Means of Communication
an acceptance not authorized by the offeror is not effective until it is received by the offeror.
Irrevocable Offers
courts are unwilling to allow an offer to be revoked when the offeree has changed a legal position based on justifiable reliance.
option contract 148
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. An option contract takes away the offeror's power to revoke an offer for the period of time specified in the option. If no time is specified, then a reasonable period of time is implied. A contract under which the offeror cannot revoke the offer for a stipulated time period. During this period, the offeree can accept or reject the offer without fear that the offer will be made to another person. The offeree must give consideration for the option (the irrevocable offer) to be enforceable.
click-on agreement 153
of clicking on a box indicating "I accept" or "I agree" to accept an online offer. Generally, the law does not require that the parties have read all of the terms in a contract for it to be effective. Therefore, clicking on a box that states "I agree" to certain terms can be enough. An agreement that arises when a buyer, engaging in a transaction on a computer, indicates 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. *****Courts have concluded a binding contract can be formed by clicking on a box indicating "I Accept" or "I Agree." Contract can be formed via website or software. Law does not require parties read all the terms.
Option Contract
offeror promises to hold an offer open in return for consideration.
forum-selection clause 153
online contract indicating the forum, or location (such as a court or jurisdiction), for the resolution of any dispute arising under the contract. A provision in a contract designating the court, jurisdiction, or tribunal that will decide any disputes arising under the contract.
cybernotary 154
or legally recognized certification authority, issues the key pair, identifies the owner of the keys, and certi-fies the validity of the public key. serves as a repository for public keys.A legally recognized authority that can certify the validity of digital signatures.
mirror image rule 149
requires that the offeree's acceptance match the offeror's offer exactly. In other words, the terms of the acceptance must "mirror" those of the offer. If the acceptance materially changes or adds to the terms of the original offer, it will be considered not an acceptance but a counteroffer—which, of course, need not be accepted. The original offeror can, however, accept the terms of the counteroffer and create a valid contract. A common law rule that requires that the terms of the offeree's acceptance adhere exactly to the terms of the offeror's offer for a valid contract to be formed.
offer 144
promise or commitment to perform or refrain from performing some specified act in the future. The party making an offer is called the offeror, and the party to whom the offer is made is called the offeree. Three elements are necessary for an offer to be effective: 1. There must be a serious, objective intention by the offeror. 2. The terms of the offer must be reasonably certain, or definite, so that the parties and the court can ascertain the terms of the contract. 3. The offer must be communicated to the offeree. A promise or commitment to perform or refrain from performing some specified act in the future.
counteroffer 149
rejection of the original offer and the simultaneous making of a new offer. An offeree's response to an offer in which the offeree rejects the original offer and at the same time makes a new offer.
partnering agreement 154
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 partnering agreement can also establish special access and identification codes to be used by the parties when transacting business electronically. An agreement between a seller and a buyer who frequently do business with each other concerning the terms and conditions that will apply to all subsequently formed electronic contracts.
agreement 144
the parties must agree on the terms of the contract. Ordinarily, agreement is evidenced by two events: an offer and an acceptance. One party offers a certain bargain to another party, who then accepts that bargain. 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. *****An essential element for contract formation is agreement. The parties must mutually assent to the same bargain. An agreement has two components: an offer and an acceptance. ****Definiteness of Terms. Identification of the parties. Object or subject matter of the contract. Consideration to be paid. Payment, delivery, or performance.
acceptance 150
voluntary act by the offeree that shows assent, or agreement, to the terms of an offer. The offeree's act may consist of words or conduct. A voluntary act by the offeree that shows assent, or agreement, to the terms of an offer; may consist of words or conduct. In negotiable instruments law, the drawee's signed agreement to pay a draft when it is presented. *****A voluntary act (expressed or implied) by the Offeree that shows assent (agreement), to the terms of an offer. Unequivocal Acceptance: the "Mirror Image" Rule..
Auctions:
when the auctioneer accepts a higher bid, she rejects all previous offers. Auctions with and Without Reserve. Agreements to Agree: can be enforceable if parties intended to be bound. *** inventetation to bid