[Student Name] 1L
[Student Email Address] Contracts
[Date] Midterm Mini Thesis Paper
Contract Law and Ecommerce
Introduction
E-commerce is a growing sector of business, and today, more than ever before, there are numerous online transactions between buyers and sellers. Such online purchases create contractual relationships between the involved parties. Online contracts, just like other forms of contracts, must fulfill the five basic aspects of offer, acceptance, capacity, consideration, and the intention element to be legally binding.
Application of the five elements of a contract to online contracts
On the offer’s element, it is important to differentiate a mere” invitation to treat “and offer. The former display merchandise by the sellers on the web pages, which portrays their willingness to sell such merchandise to interested sellers. An offer only comes into existence once an interested customer opens such pages and defines their purchase interest. Of great importance is for the online retailers to ensure that they specify that their web pages are simply invitations to treat and not offers-this should be included in the website disclaimer statements.
Formation of a contractual relationship between an online retailer and a shopper thus only comes into existence once the customers accept the “invitation to treat” and make an offer with the seller. The major controversial question has always been on the aspect of acceptance. To resolve this, the courts have come up with two major rules for the traditional contracts in order to be able to smoothly define when an acceptance is considered viable when there is no form of physical contact or meeting between the contracting parties as it happens in E-commerce. The first rule is known as the postal rule, which basically states that acceptance happens the moment a buyer sends out an acceptance letter to the seller. The second rule is known as the receipt rule; this rule relies on constant communication between the parties. According to this rule, acceptance happens when the retailing party communicates to the customer. Either of these two rules can be applied in Ecommerce to define acceptance element; for instance, if the acceptance is sent through an email, then the postal rule could be applied, although the courts in the past case have been confronted with the question of addressing the possible gaps that could exist in this mode of acceptance including the possibilities of losing emails or corruption of the same. The receipt rule is the most applied since it involves an instantaneous acceptance over the internet as there is instant feedback from both parties. If this rule is applied, then the contract will only come into existence once the prospective customer has received the retailer’s acceptance. In the instances where the customer is in a different jurisdiction, the laws of that apply to such jurisdiction are deemed the primary laws governing that contract. Thus, if a legal action arises from the contractual agreement under question, the seller or the retailer may have to handle the action overseas. It is, therefore, easier on the side of the retailer to ensure that the postal rule prevails; this can be done through specifying in the Terms and conditions that email communication shall serve as the primary mode of sending acceptance, and thus the contract shall be governed by the seller’s jurisdiction laws. To back this up, the seller can specify that all their transactions will be bound by laws of their countries irrespective of their buyer’s jurisdictions.
Consideration is another basic element of a contract. It is the value beneath an agreement that makes it a legally binding contract. This a straightforward element of e-commerce contract as the customer has to make the payment to the online seller or the goods or the services offered. The discretion of whether such a payment is made before or after the goods’ receipt should be well defined by the online retailer prior and accepted by the buyer before making an offer.
The intention to create legal relations between the buyer and the seller in an online transaction is presumed and disputed. It is easier and quite direct to establish the customers’ intentions while in a physical shop set up but not as direct when the transaction is online. In the latter set up the retailer can be able to establish and confirm the customers’ intention through three key major steps. The first step includes giving the customer a notice of defined terms and conditions that the customer must accept to be bound by prior to making the contract. This notice can be given through the inclusion of a statement that defines where such conditions can be found or simply leaving it open. The second step includes the use of the “I agree to have read and understood all the terms and conditions” tick box. The customers must tick this box before proceeding to make the transaction. The last way could be using “I accept” and “I decline” buttons on the retailer webpage. It is very important for the sellers to ensure that they display the terms and conditions and provide a hyperlink to the same instead of simply making a statement of them. The latter may not provide solid grounds for affirming an intention to create a legal relationship.
The verification of identity as well as the capacity to enter into a contract in Ecommerce can be very difficult as there is no physical contact between the parties. The aspect of identity, as well as certification of roles, is very important for the parties involved; this, however, largely depends on the value as well as the risk attached to such online transactions. For instance, very high value hence high-risk online transactions call for higher certification levels than low value hence low-risk transactions. Some of the direct ways of certifying customer identity include requiring them to fill in some personal information such as names, emails, phone numbers, dates of birth, and secure modes of payment such as credit cards. These go a long way in giving the sellers some details on the buyer’s capacity to contract. It is important to note that the seller cannot verify that such details have been provided by the person’s knowledge and without any fraud. E-commerce retailers, however, need more intense documentation for larger transactions. The major challenge is that a contract can only be evidenced by computer-generated documentation to prove the transaction. The risk of information alteration is very high as one of the parties can include or exclude some information from the contract documents without being detected. Digital signature technology has attempted to resolve this issue as it verifies the contents of the document and the signatory persons and enables the parties to authenticate the senders and the contents of the documents in question. Ecommerce is the order of the day with the seemingly growing globalization phenomena. It is, however, crucial for both retailers to ensure that those online contracts take into deeper consideration all the essential elements of contracts in order to boost the legality of such contracts.
Legal “evolution” of laws of contract
Owing to the nature of online contracts, there are some significant issues that uniquely relate to them. For instance, most if not all, online contracts involve third parties due to the communication technologies involved. For example, internet service providers (ISP) are commonly cited by various jurists while handling the online-based contract case. It is true that communication between the parties in a contract via the internet has greatly distorted the existing laws that were originally designed to be applied in physical contracts with one on the exchange of documents between the parties. Ecommerce and online contracts have thus greatly challenged the law of contract, especially the evidence, and the pre-contractual aspects and obligations. Some legal agreements may raise the need for specific legal formalities fulfillment failure to which may nullify the legal element of such contracts. Thus the original meaning of such terminologies as” writing,” signature,” “document” has greatly been altered in order to cater and accommodate the new technologies that are involved in the formation of the contracts.
The conventional composition and mark prerequisites found in the United States have consistently been disintegrated by enactment, and legal interpretation For instance, the Uniform Commercial Code characterizes ‘writing’ as ‘any deliberate decrease to substantial form. There are additional cases in which electronic substitutes for pen and paper have been found to meet Statute-of-Frauds-type administrative provisions Some writers contend that slight changes in different authoritative plans, for example, utilizing the term ‘record’ rather than ‘writing,’ combined with the capacity of US courts to adjust an assemblage of case law through the relationship between past power and current conditions, is completely adequate to keep law side by side with technologyThe extension of legal definitions by the courts through translation and similarity may inevitably set up a rational arrangement of rules; nonetheless, an all the more supportive of the dynamic methodology is to administer in the territory contemplating the expansive image of productivity and shopper insurance. When managing the legitimacy of arrangements, specifically those with a worldwide viewpoint, the business network needs good enactment to have a sense of safety.
The law administering on the web contracts is, naturally, the law of the spot, which has the most proximate nexus with the agreement. Nonetheless, the parties have the opportunity of picking the law by which the agreement and the issues emerging consequently are to be administered. The decision of law that is accessible to the parties will, notwithstanding, need to adjust to the grund standard that the parties can’t contract in opposition to what is allowable by the public laws. The topic of deciding the ward shows up rather basic once the spot of arrangement of an agreement is determined. Be that as it may, regardless of having certain indicia concerning where and when the agreement has been closed, the parties actually have the opportunity of picking the purview. The opportunity of the parties is dependent upon the cutoff points contained in the fundamental considerable and procedural laws. The arrangements of the Code of Civil Procedure and some different laws contain certain impediments on this opportunity of parties. The reason for activity, in entire or partially, may emerge in a specific spot and the agreement may likewise have been finished up at a specific spot. The parties, while concurring on a specific ward, should remember these components.
Capacity of parties
The customary standards of agreement law plainly determine with respect to who is weakened from going into an agreement. These incorporate a minor, a neurotic, an individual of a weak brain, and an individual in an intoxicated perspective. The trouble in online exchanges is that one party’s capability going into the agreement is practically obscure to the next party. The perplexing idea of online contracts makes it inconceivable for the individual going into an agreement to know whether the other contracting party is able or not. The parties to an agreement being a ways off and the nonattendance of the eye to eye association make it practically incomprehensible for one party to learn the other’s fitness. The normal outline of the issue presented by this unpredictability of the correspondence is that of minors requesting merchandise or minors taking on the appearance of grown-ups. The law should raise an assumption that once an online agreement is closed, both the parties are attempted to be equipped to do as such. As it were, neither one of the parties ought to be permitted to mention a criticism at a later stage that the agreement is unenforceable for the need of skill with respect to one of the parties.
Then again, the parties ought to be permitted to make an arrangement in the agreement itself that parties will be estopped from renouncing the agreement for the need of ability with respect to one of the parties So as to defend the interests of a guiltless contracting party, the principle of quantum meruit should even more so apply to online agreements. Web-based business players have received the act of requiring a client to enroll with them and have a username and secret key before any exchange is gone into. As a rule, if a request is to be set on the web, the client should validate the exchange utilizing a substantial charge card or a comparable instrument. The framework will proceed with preparing the request just on such confirmation. This is a serious extensive, and a healthy business practice that will deter intricacies identifying with personality and limit of parties. The specialized practicality for an agreement to be finished up between electronic operators’ gives another point to the ascertainment of the limit of parties. It is ordinary to discover Web-based specialist co-ops, similar to email suppliers, to require the client to type a word that shows up in a crate on the casing, at the hour of enlistment. This is so in light of the fact that solitary a person can peruse the word and type it in a specific field. This will discourage deceitful clients from utilizing robotized or electronic specialists to make email addresses, which may then be abused or mishandled, state for spamming.
Enforceability of online contracts
In CompuServe, Inc v. Patterson The defendant belongs to the Southern District of Ohio jurisdiction. When the question of personal jurisdiction arose, the jury affirmed that the defendant had maintained considerable contact to allow Ohio law to exercise jurisdiction over him. This determination was crucial in determining his online contract (Shares registration agreement) with AOL.
In capsi v. Microsoft, an NJ court affirmed the legality of click-wrap agreement, which had various scrolling terms that all the prospective users were required to read and understand before been given access to the services. In this case, the court specifically noted that users could only carry out the registration after they had reviewed all the terms outlined in the agreement.
In the latter instance of Forest v. Verizon Communications Inc. The inquiry was whether a discussion determination provision ordering that cases be gotten a specific ward ought to be applied to a class activity suit including offended parties’ endeavors to enlist for and utilize Verizon’s DSL administration. The client clients contended that Verizon “didn’t give . . . sufficient notification of the [forum selection] provision or its hugeness.” To become DSL members, clients needed to consent to all the conditions of the endorser understanding, including the discussion determination proviso. The provision was found in the last segment of the agreement’s primary content, which was accessible through a parchment box on their PC screens, where just a little segment of the report is obvious at any one time. The top part of the agreement expressed, “PLEASE READ THE FOLLOWING AGREEMENT CAREFULLY.” The agreement was gone into by the endorser clicking an “Acknowledge” button beneath the parchment box. The court verified that clients were given satisfactory notification of the discussion choice proviso expressing “The overall principle is that missing extortion or slip-up, one who signs an agreement is limited by an agreement which he has a chance to peruse whether he does as such or not.” The court noticed that in perusing the agreement before it was acknowledged, litigant (and different customers) would have unavoidably found the gathering choice statement. Besides, the court confirmed that the utilization of a “scroll box” in the electronic variant that shows just aspect of the agreement at any one time was negative to the arrangement of sufficient notification. The court expressed that “An agreement is no less an agreement basically on the grounds that it is gone into by means of a PC.”
In general, the statute in the United States will help enforceability of “click-wrap” gets that in any case adjust to and conform to the necessities of agreement arrangement. A few courts wouldn’t maintain some snap envelop arrangements by conditions where such crucial agreement standards have not in any case been fulfilled, for example, correspondence of the terms and states of the proposed agreement.
Conclusion
Despite on its virtual nature; Ecommerce is heavily built on the fabric of the traditional contractual law. Just like the conventional forms the online contracts are comprised on the key basic elements of capacity, intention, consideration, offer and acceptance. Parties in online contracts must however acquit themselves with every changing technology that play roles in redefining these elements in online contracts. Various challenges that jurists have pointed out include involvement of third parties such as Internet service providers as well as questions of jurisdictions in cases involving online contracts.
Bibliography
Bruce G. FORREST, Appellant, v. VERIZON COMMUNICATIONS, INC. and Verizon Internet Services, Inc., Appellees. No. 01-CV-1101
Donnie L. Kidd and William H. Daughtrey, ‘Adapting Contract Law to Electronic Contracts: Overview and Suggestions,’ (2000) 26 Rutgers Computer & Tech. LJ 215.
Jeff Dodd and James Hernandez, ‘Contracting in Cyberspace,’ (Summer 1998) Computer Law Review and Technology Journal, available online at http://www.smu.edu/~csr/articles.html, at 23-24.
Martin, Charles H. “The Electronic Contracts Convention, the CISG, the New Sources of E-Commerce Law.” Tul. J. Int’l & Comp. L. 16 (2007): 467.
Pappas, Christopher William. “Comparative US & (and) EU Approaches to E-Commerce Regulation: Jurisdiction, Electronic Contracts, Electronic Signatures and Taxation.” Denv. J. Int’l L. & Pol’y 31 (2002): 325.
Scott v. Bell Atlantic Corp. 726 NYS 2d 60 (App. Div. 2001).
Svantesson, Dan. “Jurisdictional issues in cyberspace: What should article 7—Consumer contracts, of the proposed Hague convention, aim to accomplish in relation to e-commerce?.” Computer Law & Security Review 17, no. 5 (2001): 318-325.
Tang, Zheng. “Exclusive Choice of Forum Clauses and Consumer Contracts in E-Commerce.” Journal of Private International Law 1, no. 2 (2005): 237-268.
Williams v. America Online, Inc. No. 00-0962, 2001 WL 135825 (Mass. Super. Ct. Feb. 8, 2001). In that case, users of the AOL service were unable to view the applicable terms and conditions without having to twice override the “I Agree” button by clicking the “Read Now” button two times.https://www.ftc.gov/enforcement/rules/rulemaking-regulatory-reform-proceedings/childrens-online-privacy-protection-rule
Zaremba, Jochen. “International electronic transaction contracts between US and EU companies and customers.” Conn. J. Int’l L. 18 (2002): 479
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