E-CONTRACT ESSENTIALS

Any offer to form a contract electronically should include:
(1) a clear statement of the offeree’s remedies (and limits
thereon),
(2) the applicable statute of limitations,
(3) a description of what action on the part of the offeree
will constitute acceptance,
(4) a provision specifying acceptable forms of payment,
including applicable taxes and shipping costs,
(5) the offeror’s return and refund policy (if applicable),
(6) any disclaimers of liability the offeror wants included
in the contract, and
(7) a statement about the offeror’s handling of information
provided by the offeree, or gathered by the offeror,
before and after acceptance.

Pre-Dispute Planning: The offeror may also want to include
provisions dealing with governing law, choice of forum, and
alternative dispute resolution.
Ch. 18: E-Contracts - No. 1
West’s Business Law (9th ed.)
SHRINK-WRAP AGREEMENTS

Shrink-Wrap Agreement: An agreement whose terms are
expressed inside the box containing the goods, such that a
buyer cannot make herself fully aware of the terms of her
purchase until after she has purchased/leased the goods and
opened the box.

Typically, shrink-wrap agreements indicate that the
buyer/lessee/licensee must return the goods if she does
not consent to be bound by the terms contained inside
the box.

Courts are
agreements
generally
receptive
to
shrink-wrap
(1) as long as the seller/lessor/licensor gives the
buyer/lessee/licensee adequate time to review the
terms, inspect the goods, and decide whether to
keep the goods and be bound, and
(2) particularly where the exterior of the box or some
other information provided to the buyer/lessor/
licensee before she takes delivery clearly indicates
that the purchase/lease/license is subject to
additional terms contained in the box or to be
delivered with the goods.
Ch. 18: E-Contracts - No. 2
West’s Business Law (9th ed.)
ONLINE ACCEPTANCES

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.

Browse-Wrap Terms: 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.
Ch. 18: E-Contracts - No. 3
West’s Business Law (9th ed.)
E-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. But, what does “signed”
mean when a contract is formed electronically?

Electronic 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.”

Electronic Signature Technologies include:

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.

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.
Ch. 18: E-Contracts - No. 4
West’s Business Law (9th ed.)
PARTNERING AGREEMENTS

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.

The partnering agreement can also establish special
access and identification codes to reduce the risk of
fraud or other unauthorized activity.
Ch. 18: E-Contracts - No. 5
West’s Business Law (9th ed.)
UETA

Uniform Electronic Transactions Act (UETA): Model state
legislation supporting the enforceability of electronic
contracts by
(1) presuming that contracts entered into online, as well as
other electronic documents, are valid – i.e., that they do
not violate any applicable statute of frauds; and
(2) recognizing and validating various forms of electronic
signatures relating to a transaction, including encrypted
digital signatures, names (intended as signatures) at the
end of e-mail messages, and clicks on a Web page
intended to identify the person making the click.

Freedom of Contract: UETA only applies if all parties
to a transaction have explicitly or impliedly agreed to
conduct the transaction using electronic means.

UETA also provides statutory rules governing attribution, the
effects of procedural and substantive errors in an electronic
record, and the effective time for sending and receiving
electronic records relating to a transaction.

As of April 15, 2003, 40 states and the District of Columbia
had adopted UETA.
Ch. 18: E-Contracts - No. 6
West’s Business Law (9th ed.)
E-SIGN

Electronic Signatures in Global and National Commerce
Act (E-SIGN): Federal legislation recognizing the validity of
electronic contracts, records, and signatures.

By its terms, E-SIGN yields to UETA if the state law
governing a contract includes UETA. Thus, E-SIGN
effectively puts states to a choice: enact UETA or have a
federal law preempt your non-UETA contract law.
Ch. 18: E-Contracts - No. 7
West’s Business Law (9th ed.)
UCITA

The Uniform Computer Information Transactions Act
(UCITA) governs contracts for computer information – that
is, electronic information obtained from or through the use of
a computer, or that is in a form capable of being processed by
a computer – including contracts
(1) to license or purchase software (whether reduced to
disk form or not),
(2) to create a computer program or to write an online
book or article,
(3) for online access to databases, and
(4) to distribute information via the Internet.

As of April 15, 2003, only two states – Maryland and
Virginia – had enacted UCITA, and only a few other states’
legislatures had even considered enacting it.

UCITA “Shields”: Opposition to UCITA is sufficiently
strong that at least one state (Iowa) has enacted legislation to
“shield” its residents from the effects of UCITA if they
happen to enter into a contract that would otherwise be
governed by UCITA.
Ch. 18: E-Contracts - No. 8
West’s Business Law (9th ed.)
AUTHENTICATION AND ATTRIBUTION

Authentication: Signing a record or executing or adopting an
electronic sound, symbol, or the like with the intent of signing
the record.

Attribution: To ensure that the person sending computer
information is the same person whose e-signature
accompanies the information, UCITA sets forth attribution
procedures for identifying the sender.
Ch. 18: E-Contracts - No. 9
West’s Business Law (9th ed.)
LICENSES AND ACCESS CONTRACTS

Mass-Market License: An electronic form contract
presented – typically in either shrink-wrap or click-wrap
form – along with a “package” of purchased or downloaded
computer information.

Mass-market licenses arise in
(1) consumer contracts, and
(2) transactions in which computer information is
directed to the general public and the end-user
licensee acquires the information in a retail
transaction.

Mass-market licenses are automatically enforceable as
long as
(1) the terms of a license are readily available and
(2) the licensee had an opportunity to review the
terms before accepting the license.


Access Contract: A contract to obtain, by electronic means,
access to, or information from, another person’s information
processing system.
Ch. 18: E-Contracts - No. 10
West’s Business Law (9th ed.)
ELECTRONIC SELF-HELP

Electronic Self-Help: UCITA allows licensors to cancel,
repossess, prevent continued use, and otherwise stop a
licensee from using the licensor’s computer information in
the event of a breach by the licensee of the license agreement,
subject to the following limitations:
(1) a licensor may not use electronic self-help against a
mass-market licensee;
(2) a licensor may not use electronic self-help against a nonmass market licensee unless the license agreement or
some separate agreement between the parties allows for
electronic self-help;
(3) a licensor who is otherwise authorized to use electronic
self-help may not do so without fully disclosing the
alleged breach to the licensee and giving the licensee at
least 15 days’ prior notice, in order to enable the
licensee to cure the breach prior to the licensor’s
exercise of electronic self-help; and
(4) a licensor who is otherwise authorized to use electronic
self-help may not do so if the licensor has reason to
know that its use will result in “substantial injury or
harm to the public health or safety or grave harms to
the public interest.”
Ch. 18: E-Contracts - No. 11
West’s Business Law (9th ed.)