E-Contracts, are they legal and enforceable?

Summary

This video delves into the world of e-contracts, exploring their legal framework and application in online transactions. The presenter covers essential contract principles, such as offer and acceptance, alongside the unique challenges posed by digital agreements, like click-on and shrink-wrap contracts. The discussion includes examples from popular websites like Woot and Amazon, highlighting the importance of clear terms and enforceable agreements. Furthermore, it examines relevant laws like the E-Sign Act and the Uniform Electronic Transactions Act (UETA), which validate electronic signatures and establish guidelines for digital transactions. The video concludes by emphasizing the enforceability of e-contracts in the digital age.

Takeaways

• 😀 An eContract is a regular contract where traditional contract law principles, such as offer and acceptance, capacity, and consideration, still apply.
• 😀 In an online transaction, the seller's website controls the offer, and a hyperlink to the full contract terms is part of the agreement, even if the user doesn't click on it.
• 😀 A click-on agreement is enforceable, even if the user doesn't read the full terms, as long as they affirmatively click to agree.
• 😀 Common elements found in online contract agreements include return policies, copyright and trademark clauses, dispute resolution, and limitation of liability clauses.
• 😀 Dispute resolution in online contracts may often involve binding arbitration, and the applicable law is usually chosen by the business, with many websites opting for Washington State.
• 😀 Click-on agreements and shrink-wrap agreements (where acceptance occurs when opening a shrink-wrapped software box) are both enforceable, but shrink-wrap agreements can be unenforceable if they contradict agreed-upon terms or add unexpected clauses.
• 😀 Browse-wrap agreements, where users unknowingly accept terms by simply using a website, are typically unenforceable unless the terms are conspicuous and require affirmative agreement.
• 😀 The E-SIGN Act of 2000 validates electronic signatures, ensuring they are just as enforceable as physical signatures in electronic contracts, as long as the parties agree to use e-signatures.
• 😀 The Uniform Electronic Transactions Act (UETA) defines e-signatures broadly, including electronic sounds, symbols, and processes like clicking 'I agree,' further confirming the enforceability of digital agreements.
• 😀 The UETA applies to electronic contracts involving transactions between businesses but does not cover legal documents like wills or powers of attorney, and both parties must agree to use electronic methods.
• 😀 When a state adopts the UETA and conforms to the E-SIGN Act’s criteria, the UETA preempts the federal E-SIGN Act, as state law takes precedence in such cases.

Q & A

What is an eContract?

An eContract is an electronic version of a traditional contract. It still adheres to the same common law principles of contract law, including offer, acceptance, capacity, consideration, legality, and form.

How do online offers work in eContracts?

In eContracts, the seller's website typically controls the transaction. An offer is made when a seller's site provides a hyperlink to the full contract terms, and even if the buyer doesn't click the link, they are still bound by the contract terms when they click 'buy now'.

What is a 'click-on agreement'?

A click-on agreement occurs when a user agrees to the terms and conditions by clicking a button, such as 'I agree', even if they haven't read the full terms. This form of agreement is legally binding.

What types of terms are generally included in an online contract?

Typical terms include return policies, copyright and trademark information, communication methods, licensing and access details, reviews, refunds, and disclaimers of warranties and limitations of liability.

Why are disclaimers of warranties often in all caps in online agreements?

Disclaimers of warranties are often in all caps to ensure they are conspicuous and legally valid. The law requires such disclaimers to be clearly visible for enforceability.

What is the difference between a 'click-on agreement' and a 'shrink-wrap agreement'?

A click-on agreement occurs when a user clicks to agree to terms on a website, while a shrink-wrap agreement is formed when a consumer opens a product (like software) sealed in shrink wrap, which indicates acceptance of the terms inside.

Are shrink-wrap agreements always enforceable?

Shrink-wrap agreements are sometimes enforceable, but they are unenforceable if they introduce terms that are beyond what the buyer could reasonably expect or contradict terms already agreed upon.

What are 'browse-wrap agreements' and how do they differ from other online agreements?

Browse-wrap agreements automatically assume that a user agrees to terms by using a website, without any explicit action like clicking 'I agree'. These agreements are often unenforceable unless they are conspicuous and affirmatively accepted by the user.

What are the key features of the E-Sign Act?

The E-Sign Act ensures that electronic signatures are legally valid and enforceable, stating that an electronic signature is just as valid as a physical one as long as both parties agree to use e-signatures.

What is the Uniform Electronic Transactions Act (UETA) and how does it differ from the E-Sign Act?

The UETA is a broader law that removes barriers to electronic transactions and provides a detailed definition of electronic signatures. It applies only to transactions and does not cover documents like wills or powers of attorney. Unlike the E-Sign Act, UETA provides more comprehensive coverage of electronic contracts.