Cyberlaw and the Global Economy
Class 2.1: Online Transactions
Harvard Law School
Fall, 2004
John Palfrey
September 16, 2004
Cyberlaw and the Global Economy
Commercial
Transactions
Intellectual
Property
Data Protection,
Security
and Privacy
ICT and
Development
2.1 Online Transactions
2.2 Spam
2.3 Mergers & Acquisitions
Roadmap for today
• Online Transactions
– Blocking and tackling of transactions in digital
goods and services
• Shrinkwrap
• Clickwrap
• Browsewrap
– Cross-border dynamics
– [Other issues, if time permits
• Taxation problems
• E-signatures: UETA, E-Sign, EU Directives]
Shrinkwrap
• Software purchase in shrinkwrap
• MicrosoftXP Office box reads:
“You must accept the enclosed License
Agreement before you can use this product.
… If you do not accept the terms of the
License Agreement, you should promptly
return the product for a refund.”
Shrinkwrap - II
• MicrosoftXP Office
• Privacy Policy:
“Instructions and Microsoft’s privacy policy will
be detailed to the user during launch of the
product.”
Shrinkwrap – III
• Delayed presentation of terms
– When is a contract formed?
– On what grounds might it not be a binding
contract?
• “Take it or leave it” situation?
– Brower v. Gateway 2000, Inc.
Shrinkwrap – IV
• Transaction in shrinkwrapped software.
– Customer is in Amsterdam.
– Seller is in the Bay Area.
– Customer is bound by an arbitration
agreement in California.
– Customer can return the goods, but they only
cost $9.99 USD.
Clickwrap
• Method by which assent is obtained: who offers,
who accepts? Why and how does it matter?
• When is a contract formed?
• How many people actually read the agreements
as they go through them? Does it matter if no
one reads them?
• Do we seek a contract regime that is more
protective of consumers online in some fashion?
• Impact of the unsympathetic plaintiffs?
– Rudder v. Microsoft (Ontario, 1999)
Browsewrap
• Is it enough for the contract that you seek
to bind your customer is linked from
somewhere on the site?
• Is a click-through strictly necessary to
create a binding contract?
– Specht v. Netscape Communications (2001)
Unconscionability
• PayPal v. Comb:
– Is it a browsewrap case or an
unconscionability case?
• Does it differ from Brower v. Gateway?
• Does this doctrine help with cross-border
problems?
Problem 13.5, Mann p. 214
• “Article 10
Information to be provided
[…]
3. Contract terms and general conditions
provided to the recipient must be made
available in a way that allows him to store
and reproduce them.”
-- EU E-Commerce Directive
Conflict
• Imagine a dispute in a transaction between the customer
in Amsterdam and the company in the United States.
• How do we determine the choice of law that shall apply?
– If it’s in the contract, is that the end of the story? Does the
European customer lose her consumer protections as her home
country has defined them? (EU Distance Sale Directive, ECommerce Directive).
– If the contract is silent on this term, what do we do?
– (Might consider the impact of CISG. How do we know if it’s
“goods” that are involved in digital transactions? B2B v. B2C
distinction.)
• Taxation: Can the Bellas Hess rule work globally?
– Grants safe harbor to sellers “whose only connection with
customers in the taxing State is by common carrier or the US
Mail”.
Admin
• Please sign up:
– H2O (required)
(Questions? E-mail:
hroberts@cyber.law.harvard.edu)
• Office Hours:
– Thursdays, 1:00 – 3:00 p.m.
(cbracy@cyber.law.harvard.edu to reserve
time)
Berkman Center for Internet & Society
Harvard Law School
http://cyber.law.harvard.edu
John Palfrey
September 16, 2004